February 14 (SeeNews) - Serbia's central bank, NBS, said on Tuesday it will keep its key repo rate unchanged at 4.0% - for the seventh time in as many months.
"The Executive Board decided to maintain the current level of expansionary monetary policy by keeping in mind the new mid-term inflation projection, the effects of previous monetary easing and the fact that the target for inflation since the beginning of this year has been lowered to a band of 1.5%-4.5%," NBS said in a statement.
The NBS board expects that inflation will remain low and stable, and that from the beginning of the year it will move within the target band, as a result of the recovery of crude oil prices and the rise of demand on the domestic market.
"On the other hand, the relatively low cost of food production will keep acting as a disinflationary factor for some time," NBS added.
NBS explained that when it comes to international financial markets, there is uncertainty related to oil prices and the divergence of monetary policies of leading central banks and their influence on the global capital flows.
The improved macroeconomic prospects of Serbia's economy increase its resilience to possible adverse effects from the international environment, the central bank added.
NBS last changed the repo rate in July, cutting it by 0.25 percentage points to help guide inflation to the targeted band.
Serbia’s consumer price inflation accelerated to 1.6% year-on-year in December from 1.5% in October. On a monthly comparison basis, consumer prices fell by 0.1% in December, the same rate of decline as in November.
The NBS will hold its next rate-setting meeting on March 14.