January 9 (SeeNews) - Erste Group expects Serbia's central bank NBS to keep its key repo rate unchanged at 3.5% at its meeting on Thursday, amid stable inflationary developments and improving economic conditions, the Austria-based banking group said.
"We see the NBS remaining on hold at 3.5%, i.e. keeping the key rate unchanged in the following months," Erste Group said in a weekly insights report on countries of Central and Eastern Europe (CEE) published on Monday.
The beginning of the year brought renewed depreciation pressures on the exchange rate, which prompted the NBS to intervene on the foreign exchange market with 60 million euro ($71.6 million) on the sell side, Erste Group said.
"The dinar currently settled slightly below the 120 mark, while on the bond market, we did not see any major developments, as benchmark yields stayed relatively flat week-on-week," the group said in the statement.
NBS kept the repo rate unchanged at 3.5% at its last rate-setting meeting held on December 8. The central bank cut the repo rate by 0.25 of a percentage point to 3.75% in September and lowered it further to 3.5% in October to help guide inflation to the target band.
Serbia's annual consumer price inflation slowed to 2.8% in October from 3.2% in September, according to the latest official data available. On a month-on-month comparison basis, the consumer price index (CPI) rose 0.2% in October after increasing 0.1% in September.
($ = 0.838176 euro)