The National Bank of Serbia (NBS) said on Thursday that it had lowered its key policy rate from 2.5 to 2.25 percent, the lowest level under the targeted inflation regime.
An NBS statement said that the decision was taken in support of credit and economic growth. “The (NBS) Executive Board primarily had in mind the fact that inflationary pressure has weakened… Year on year inflation in Serbia has slowed over the past few months and stood at 1.1 percent in September,” it said.
The NBS said that the resilience of the Serbian economy against possible negative international effects has been increased thanks to lower internal and external imbalances, better macroeconomic prospects and a record high level of the hard currency reserves.
The NBS said that the Dinar will be at its highest value against the Euro this year on Friday when the exhange rate will stand at 117.4673 Dinars to the Euro. The NBS intervened on the Foreign Exchange market to buy 30 million Euro and ease excessive exchange rate fluctuations. The Dinar stood weakest against the Euro on January 29 when it traded for 118.4940 to the Euro. The NBS said it had sold 250 million Euro and bought 2.7 billion Euro on the FX market .
“Public finances are showing a surplus as in the previous two year and the current accounts deficit has been fully covered by the net inflow of foreign direct investments for the fifth year in a row. Current economic indicators show that the growth of the GDP in the third quarter was higher than predicted,” the NBS said.
The decision was also influenced by international trends, primarily the slow down in global trade and economic growth and measures to ease monetary policy introduced by leading central banks, the statement said.
The NBS Executive Board also adopted the latest inflation report which will be presented on November 14. The next session of the board will be held on December 12 to take a new decision on the key policy rate.