November 10 (SeeNews) - Serbia's central bank, NBS, said on Thursday it decided to keep its key repo rate at 4.0% - for the third time in as many months.
"In the coming months, the annual inflation rate is expected to start growing gradually and to stand within the 1.5%-4.5% target band at the beginning of next year," NBS said in a statement. "It is expected that year-on-year inflation will rise gradually in the coming months, return within the new target tolerance band early next year and move within the band thereafter."
"Such inflation trends are caused by the effects of previous monetary policy decisions as well as the gradual increase in oil prices on global markets. On the other hand, the good agricultural season could have a disinflationary effect, as it would push down food production costs," NBS said.
NBS noted that uncertainty exists in the international financial markets about the future measures that could be taken by the US Federal Reserve and the European Central Bank and their potential impact on global capital flows.
However, the successful implementation of fiscal consolidation and structural reforms, as well as the reduction of external imbalances increase the resilience of the Serbian economy to potentially adverse effects from the international environment, NBS said. This had been confirmed by the positive assessment of the International Monetary Fund (IMF) after their October visit, the decline in risk premium and the improvement of business and investment environment, NBS added.
In July, Serbia cut the repo rate by 0.25 percentage points to help guide inflation to the targeted band.
Serbia’s consumer prices rose by 0.6% year-on-year in September, slowing from a 1.2% increase in the previous month. On a monthly comparison basis, consumer prices dropped 0.6% in September, after edging up 0.9% in August.
The NBS will hold its next rate-setting meeting on December 8.