Serbian c-bank cuts policy rate to 6.25%

"In view of the further waning of global inflationary pressures and the disinflationary impact of tight monetary measures so far, the Executive Board assessed that conditions are in place to embark on monetary policy easing by lowering the key policy rate," the central bank, NBS, said in a statement.

NBS also cut by 25 bps each its deposit facility rate and lending facility rate, to 5.00% and 7.50%, respectively.

It noted that global inflation has also continued to subside and approach pre-pandemic levels, supported by past monetary policy tightening, weaker cost-push pressures and the easing of global supply chain bottlenecks.

"The NBS Executive Board does not expect any major increase in the prices of products and services we import, but continues to keep a close eye on all supply- and demand-side factors which could impact future inflation movements, and this will form the basis of future monetary policy decisions," the central bank said.

Serbia's annual inflation eased to 4.5% in May from 5% in April on the back of slower growth in food and beverages prices. It thus returned to the targeted range of 1.5% to 4.5%, and NBS has said the target midpoint should be reached by year-end, with inflation hovering around that level in the medium term.

NBS also recalled that on June 6, the European Central Bank (ECB) started easing its monetary policy by lowering its key rates by 25bps each, pointing out that its future decisions will be based on a cautious assessment of inflation dynamics and outlook.

NBS last changed its repo rate in July 2023, increasing it by 25 basis points to 6.5% to counter inflationary pressures. The central bank will hold its next rate-setting meeting on July 11.