Serbia's C-bank Keeps Key Repo Rate Flat at 12%

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.

It did not elaborate but the head of the Sector for Economic Analysis and Research at the NBS, Branko Hinic, said two weeks ago there was still room for monetary policy easing given low demand, the stability of the local dinar currency, the freezing of salaries in the public sector and the government’s expectations that the growth of regulated prices will be considerably slower in the second half of 2009.

The NBS expects Serbia's consumer price index (CPI) to grow 9.0% in 2009. CPI will remain flat in the third quarter of 2009 compared to the previous quarter. Regulated prices grew 14.9% in the first eight months of this year compared to the government's projection for a full-year gain of 13%, plus or minus 2.0%, Hinic said.

Serbia's July CPI fell 0.9% month-on-month after remaining flat in June. On an annual basis, inflation in July sped up to 8.5% from 8.3% in June.

NBS last changed the repo rate on July 10, cutting it to 12% from 13%. It also relaxed lending rules for local banks to stimulate domestic demand amid the global economic downturn.

The monetary committee will hold its next session on October 8.

($=0.6759 euro)