September 16 (SeeNews) - Serbia's central bank, the NBS, plans to discontinue as of October 7 the regular weekly securities repo auctions as banks no longer need additional liquidity, it said.
The auctions, introduced in November 2020 and carried out on Thursdays, have served their purpose as they supported banks in a situation of uncertainty and strained economic activity caused by the coronavirus crisis, the central bank said in a statement on Wednesday.
"Liquidity of the Serbian banking sector is running high and it is assessed that in the current circumstances the NBS’s standing facilities for the provision of additional liquidity are no longer necessary," the NBS said.
Withdrawing the additional liquidity-creation tool is deemed to be an appropriate response to the rise of inflation to the higher part of the 1.5%-4.5% target band in August, the central bank explained.
Serbia's consumer prices rose by 4.3% year-on-year in August, pushed up by temporary factors, which was also confirmed by stable core inflation of 1.8%, the NBS added.
Three more auctions of repo purchase of securities will be held in September, supplying dinar liquidity for a period of three months.