June 8 (SeeNews) - Serbia's central bank, NBS, said on Thursday it will keep its key repo rate unchanged at 4.0% - for the eleventh time in as many months.
When taking this decision, the NBS board kept in mind inflationary factors, the effects of previous monetary easing as well as projections stating that inflation will remain within the target band of 1.5%-4.5% in the next two years, NBS said in a statement.
Upward inflationary pressure will come mainly from the gradual recovery of domestic demand and inflation abroad, while the high base effect of petroleum product prices will slow it down, the Serbian central bank said.
Serbia’s consumer prices rose by 4.0% year-on-year in April following an annual increase of 3.6% in March, according to the latest official data available. On a monthly comparison basis, consumer prices grew by 0.8% in April, after rising by 0.2% in March.
As the one-off price hikes of unprocessed food and firewood drop out from the annual comparison, inflation will stabilise at a lower level compared to its current level as of the start of next year, but will stay within the target tolerance band, the NBS said.
Uncertainties in the international financial market stem largely from the diverging monetary policies of the leading central banks, the Fed and the ECB, which may impact global capital flows to emerging economies, including Serbia. The favourable macroeconomic prospects, as well as the reduction of external imbalances increase the resilience of the Serbian economy to possible adverse effects from the international environment, NBS said.
NBS last changed the repo rate in July, cutting it by 0.25 percentage points to help guide inflation to its target band.
The NBS will hold its next rate-setting meeting on July 10.