July 11 (SeeNews) - Serbia's central bank said on Thursday it decided to keep its key repo rate unchanged at 3.0%.
"In making this decision, the executive board was primarily guided by the expected inflation movement and its underlying factors from the domestic and international environment," the central bank, NBS, said in a statement.
Serbia's average annual consumer price inflation accelerated to 3.1% in April, from 2.8% in March, which is expected to be its peak for 2019, the central bank said.
"Inflation is expected to embark on a downward path from May onwards, moving close to the lower bound of the target band in the first half of 2020 and heading steadily back towards the target midpoint in the period thereafter."
On a monthly comparison basis, Serbia's consumer price index (CPI) increased by 0.7% in April, after rising by 0.4% in March.
The central bank also said it remains cautious in its monetary policy, due to international market developments, as protectionist measures and trade tensions cause uncertainty in the commodity and financial markets, while demand- and supply-side factors make the future movements of oil prices uncertain.
The pace of the monetary policy normalisation by the Fed and the ECB will be slower than expected due to the slowdown in global economic growth and inflation, which could bring volatility to global capital flows, the NBS said.
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 3.25% in March 2018 and then lowered it further to 3.0% in April 2018 to help guide inflation to its target band.
The NBS will hold its next rate-setting meeting on July 11.