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UPDATE 1 - Serbia's c-bank holds key repo rate at 3.5%

UPDATE 1 - Serbia's c-bank holds key repo rate at 3.5% By NMedjedov (Own work), via Wikimedia Commons

BELGRADE (Serbia), December 7 (SeeNews) - Serbia's central bank, NBS, said on Thursday it will keep its key repo rate unchanged at 3.5%.

"In making this decision, the Executive Board was guided by the November inflation projection and the movement in its key factors, the expected effects of past monetary policy easing, better economic performance in the third quarter and improved outlook," the central bank said in a statement.

The inflation rate will remain within the target band of 1.5%-4.5% in the short term. Inflation is likely to stand in the lower part of the target band in the first half of 2018, due to the low prices of petroleum products which recorded one-off hikes early this year. The expected rise in domestic demand will work in the opposite direction, NBS noted.

Serbia's annual consumer price inflation slowed to 2.8% in October from 3.2% in September, according to the latest official data available. On a month-on-month basis, the consumer price index (CPI) rose 0.2% in October after increasing 0.1% in September.

Uncertainties in the international financial markets stem largely from the diverging monetary policies of the leading central banks, the Fed and ECB, which may impact capital flows to emerging economies. However, the resilience of the Serbian economy to potential negative impact from the international environment has increased, owing to the strengthening of the macroeconomic fundamentals, the NBS said.

The NBS Executive Board adopted a Memorandum on Inflation Targets, which sets the inflation target at 1.5%-4.5% until 2020, the central bank added.

The central bank cut the repo rate by 0.25 of a percentage point to 3.75% in September and lowered it further to 3.5% in October to help guide inflation to the target band.

The NBS will hold its next rate-setting meeting on January 11.

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