Erste expects Serbia c-bank to cut repo rate by 125 bps by end-'24

On Thursday, Serbia's central bank, NBS, decided to keep its repo rate unchanged at 6.5%, motivated by declining, yet still elevated, global inflationary pressures.

"NBS met market expectations once again and kept the key rate unchanged for the 9th month in a row," Erste said in an instant comment on Thursday. "We still see the NBS waiting for the ECB and Fed to move first, before cutting its rates, likely starting in July."

The NBS last changed its policy rate in July 2023, increasing it by 25 basis points to 6.5% to counter inflationary pressures. On Thursday, NBS said it sees annual inflation returning to the targeted range of 1.5% to 4.5% already in May, a month earlier than previously expected.

Serbia's annual inflation slowed down to 5.6% in February from 6.4% in January, thanks to slower growth in food prices, latest available official data showed. The consumer price growth cooled down to 7.6% at end-2023 from 15.1% at end-2022. The statistical office will release March inflation figures later on Friday.