UPDATE 1 – Central Bank of Serbia keeps key repo rate at 1.0%

BELGRADE (Serbia), July 8 (SeeNews) – Serbia’s central bank, NBS, announced Thursday that it has decided to keep its key repo rate at 1.0%.

In taking this decision, the central bank was guided by the monetary and fiscal policy measures taken previously which should continue to have a positive economic effect, the financing conditions of the economy and citizens will remain favorable and their disposable income will increase, NBS said in a statement after a rate-setting meeting of its board of directors.

The government’s implementation of the third package of economic measures this year will also contribute to economic growth, the central bank said.

“The board stressed that Serbia is one of the few economies to have already surpassed the level of pre-crisis economic activity in the first quarter of this year. It is particularly important that during the pandemic, due to monetary coordination and fiscal policy measures, productive capacities and jobs have been preserved, as well as business and consumer confidence, ”the central bank noted.

The board expects growth in fixed-fund and consumer investment to contribute the most to economic growth this year, the NBS said. “External demand is also picking up, with further growth in Serbian exports, which will continue to be geographically and productively distributed, supported by a further significant influx of foreign direct investment.”

The uncertainties stem mainly from the price of oil on world markets, which rose 45% in the first half of 2021, while an upward trend is also recorded in food prices, the SNB noted.

The central bank lowered its key repo rate to 1.25% from 1.5% in June 2020 and lowered it further by 1.0% in December to counter the negative economic effects of the coronavirus epidemic .

Consumer prices in Serbia rose 3.6% year-on-year in May, after increasing 2.8% in April, according to official statistics. On a monthly comparison basis, Serbia’s Consumer Price Index (CPI) rose 0.5% in May, after rising 1.1% in April, according to the latest figures published on the site. Internet of the national statistical office.

The SNB will hold its next rate setting meeting on August 12.

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