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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% By NMedjedov (Own work), via Wikimedia Commons

BELGRADE (Serbia), October 7 (SeeNews) - Serbia's central bank, NBS, said on Thursday it decided to hold its key repo rate at 1.0%.

The bank kept the deposit and credit reference rates unchanged at 0.10% and 1.90%, respectively, but lifted the average executive repo rate by 13 basis points to 0.24% in a first step towards monetary tightening, NBS said in a statement, following a rate-setting meeting of its executive board.

"Monetary conditions were thus tightened without changing the key policy rate and the interest rate corridor. The NBS effectively exercised a flexible approach to monetary policy conduct," NBS said.

In making the decisions, the central bank was guided by the higher inflation rate compared to the beginning of 2021, caused by last year's low base and supply-side factors. Uncertainties stem primarily from new virus strains, occasional halts in supply chains and imbalances in the labour market which still pose a risk to global growth, while oil and other primary commodity prices remain significantly volatile and dependent on a number of supply- and demand-side factors, the NBS said.

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 4.3% year-on-year in August, after growing by 3.3% in July, according to national statistics. On a monthly comparison basis, Serbia's consumer price index (CPI) went up 0.9% in August, after rising by 0.2% in July.

The NBS will hold its next rate-setting meeting on November 9.