November 29 (SeeNews) - Erste Group expects Serbia's central bank to keep its key repo rate unchanged at 1.0% throughout 2022, as core inflation is expected to remain low, the Austria-based banking group said.
The key reasons for the decision are the low core inflation and the strategy of the central bank to hold a firm grip on exchange rate stability, Erste said in a report on the monetary policy of central banks across Central and Eastern Europe (CEE) on Friday.
"The NBS would consider hiking conditional on inflation remaining above the target band in 2H22," Erste said.
Serbia's central bank last cut its key repo rate to 1.0% from 1.25% in December last year, citing the deteriorating epidemiological situation and the slowdown in global economic recovery, especially in Europe.
The key repo rate now stands 1.25 percentage points below the level in force before the outbreak of the COVID-19 pandemic - a change that is expected to improve financing conditions and support the growth of the personal income, the central bank said last month.