FX.co ★ Serbia Holds Interest Rate at 5.75%

In November, the National Bank of Serbia decided to maintain its benchmark interest rate at 5.75%, along with its deposit and credit facility rates at 4.5% and 7%, respectively. Inflation has seen a marked deceleration, dropping to 2.9% in September and slightly further to 2.8% in October. This reduction has been partly due to government-imposed limits on trade margins for specific goods. The Bank forecasts inflation to stay close to its 3% target, a prediction bolstered by legislation designed to combat unfair trade practices, diminishing global cost pressures, and the prospect of a stronger agricultural output. However, rising disposable incomes might offset these factors. In the third quarter, GDP growth slowed to 2.0%, driven mainly by the automotive sector, exports, and the service industry, with a noted decline in investment and consumer confidence. The Bank's Board highlighted the need for vigilance amid global uncertainties, trade tensions, and geopolitical risks. They reaffirmed their commitment to a data-informed and adaptable policy approach, aiming to sustain financial stability and foster economic growth.