Serbia's C-bank Keeps Key Repo Rate Flat at 11%

The bank’s monetary committee decided to keep the rate unchanged, taking into account the current economic developments, the central bank said in a statement without elaborating.

NBS Governor Radovan Jelasic said earlier this month that the bank is ready to lower its key rate further by the end of the year if regulated prices rise by no more than 9.0% and the government cuts the budget deficit in 2010.

Serbia and the International Monetary Fund on Monday agreed the country can run a budget deficit equivalent to 4.0% of the projected gross domestic product (GDP) next year, down from 4.5% of GDP agreed on for 2009.

The government in Belgrade said earlier that state-controlled prices will grow by 11% next year with a variation band of two percentage points on either side.

NBS last changed the repo rate on October 8, cutting it to 11% from 12%. It also cut the ratio of dinar-denominated mandatory reserves to 25% from 30%, aiming to boost the liquidity of the country’s banking system.

The bank's key rate has come down from 17.75% over the course of 2009.

The NBS monetary committee will hold its next session on November 5.

($=0.6773 euro)