July 9 (SeeNews) - Serbia's central bank, NBS, said on Thursday it has decided to keep its key repo rate unchanged at 1.25%.
The central bank maintained its key repo rate as the past cuts are expected to influence trends in the financial and real sectors and contribute to preserving the favourable terms of financing of businesses and households, NBS said in a statement following a rate-setting meeting of its executive board.
The NBS cut its key repo rate to 1.5% from 1.75% in April and to 1.25% from 1.5% in June to counter the adverse economic effects of the coronavirus outbreak.
In keeping the key policy rate unchanged, the executive board was also guided by the uncertainty in the commodity markets, above all the outlook for primary commodity prices, notably the volatile price of oil.
The inflation is likely to move around the lower end of the 1.5%-4.5% target band until the end of 2020 before gradually approaching the target midpoint in the medium term under the impact of the recovery of demand supported by monetary and fiscal policy measures, the central bank said.
Serbia's consumer prices rose by 0.7% year-on-year in May, after growing by 0.6% in April, official statistics show. On a monthly comparison basis, Serbia's consumer price index (CPI) declined by 0.2% in May, after remaining flat in April, according to figures published on the website of the national statistical office.
The strongest effects of the crisis were felt in Serbia in April, as was the case with most other European countries, and in the months to come the country will experience recovery, supported by the undertaken measures, the NBS said. This will lead to GDP growth of at least 6% in 2021, the central bank added.
The NBS will hold its next rate-setting meeting on August 13.