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UPDATE 1 - Serbia's c-bank cuts key repo rate to 2.5%

Author Radomir Ralev
UPDATE 1 - Serbia's c-bank cuts key repo rate to 2.5% Author: SeeNews. License: All rights reserved.

BELGRADE (Serbia), August 8 (SeeNews) - Serbia's central bank decided on Thursday to cut its key repo rate to 2.5% from 2.75% to back lending and economic growth amid low inflationary pressure, it said.

The central bank was guided by the medium-term inflation projection and the expected development of other macroeconomic indicators from the domestic and international environment, the central bank, NBS, said in a statement, announcing the second rate cut in as many months. 

"Low inflationary pressures are also indicated by the core inflation, which remains low and stable, as well as the lower inflation expectations by the financial sector and the economy below the 3.0% target for one and two years ahead," the NBS said.

Inflation was tightly controlled for the sixth consecutive year, and is expected to stay in the lower part of the 1.5%-4.5% target band by the end of next year, the central bank noted.

Serbia's average annual consumer price inflation slowed to 1.5% in June, from 2.2% in May, according to the latest official data available. On a monthly comparison basis, Serbia's consumer price index (CPI) fell by 0.3% in June, after decreasing by 0.3% in May.

The decision to reduce the key repo rate was also caused by developments in the international environment, notably the slowdown in global trade and economic growth and the lax monetary policies of the Fed and the ECB. 

However, the resilience of the Serbian economy to a potential negative impact from the international environment has increased, owing to improved macroeconomic indicators and prospects.

NBS cut the repo rate by a quarter of a percentage point to 2.75% in July to support economic growth.

The central bank will hold its next rate-setting meeting on September 12.