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UPDATE 1 - Serbia's c-bank holds key repo rate at 1.0%

Author Radomir Ralev
UPDATE 1 - Serbia's c-bank holds key repo rate at 1.0% Source: National Bank of Serbia

BELGRADE (Serbia), July 8 (SeeNews) - Serbia's central bank, NBS, said on Thursday it decided to hold its key repo rate at 1.0%.

In making this decision, the central bank was guided by the previously taken monetary and fiscal policy measures which are expected to continue having a positive economic effect, the conditions for financing the economy and citizens will remain favourable, and their disposable income will grow, NBS said in a statement, following a rate-setting meeting of its executive board.

The implementation of the third package of economic measures by the government this year will also contribute to economic growth, the central bank said.

"The Executive Board pointed out that Serbia is one of the few economies that has already exceeded the pre-crisis level of economic activity in the first quarter of this year. It is especially important that during the pandemic, as a result of coordinated monetary and fiscal policy measures, production capacities and jobs were preserved, as well as business and consumer confidence," the central bank noted.

The board expects that the growth of investments in fixed funds and consumption will contribute the most to economic growth this year, the NBS said. "External demand is also recovering, with further growth of Serbian exports, which will continue to be geographically and productively distributed, supported by a further strong inflow of foreign direct investments."

Uncertainties stem primarily from the price of oil on the global markets, which increased by 45% in the first half of 2021, while an upward trend is recorded also in the prices of food, the NBS noted.

The central bank cut its key repo rate to 1.25% from 1.5% in June 2020 and lowered it further 1.0% in December to counter the adverse economic effects of the coronavirus outbreak.

Serbia's consumer prices rose by 3.6% year-on-year in May, after growing by 2.8% in April, official statistics show. On a monthly comparison basis, Serbia's consumer price index (CPI) went up 0.5% in May, after rising by 1.1% in April, according to the latest figures published on the website of the national statistical office.

The NBS will hold its next rate-setting meeting on August 12.