Serbia's c-bank may cut key rate by 25bps - Erste

NBS left its key rate unchanged at 6.50% at its last rate-setting meeting last month, citing considerations of global inflation trends and uncertainties in energy and primary product prices. Serbia's central bank last changed its key rate in July 2023, increasing it by 25 basis points to counter inflationary pressures.

"[...] after the ECB cut rates recently, and with local inflation finally within target band, we expect the NBS might also cut its key rate by 25bps at tomorrow’s meeting," Erste Bank said in an instant comment following the release of Serbia's May inflation report.

The statistics office said earlier on Wednesday that 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.

NBS said earlier it expects that annual inflation will return to the targeted range of 1.5% to 4.5% already in May, a month earlier than previously anticipated, adding the target midpoint should be reached by year-end, with inflation hovering around that level in the medium term.

The Erste Bank analysts also noted they expect Serbia's annual inflation to slow down to 3.5% at the end of 2024.