NBS keep reference rate at one pct, repo rate increased

NEWS 07.10.2021 13:45
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Narodna banka Srbije, NBS
Source: N1

The National Bank of Serbia (NBS) Executive Board said on Thursday it kept the reference, or key policy rate at the level of one percent, while the average repo rate increased to 0.24 percent.

„The rate on deposit facilities (0.10%) and the rate on credit facilities (1.90%) remained unchanged, but the first measure was taken to tighten monetary conditions – the average repo rate at yesterday’s reverse repo auction was increased by 13 basic points, from the previous 0.11 percent, which it averaged since the beginning of the year, to 0.24 percent, „the central bank said in a statement.

In making such decisions, the Executive Board had in mind that the higher inflation rate compared to the beginning of the year, similarly to other countries, was mainly due to 2020 low base and supply-side factors, which monetary policy cannot influence.

„It is primarily about the growth of world prices of oil and other primary products in previous months, which, along with delays in global supply chains, has led to higher cost pressures on the world and domestic markets. „In addition, the prices of vegetables on the domestic market have been growing more markedly since April due to the drought, which has influenced the inflation in August to amount to 4.3 percent year-on-year,“ the NBS states.

The NBS said the pressures were primarily on the supply side – low and stable core inflation (1.8 percent year on year in August) and short-term and medium-term inflation expectations, which in the case of the financial sector and the economy are around central values of the goal.

The NBS Executive Board expects that year-on-year inflation in the next few months is likely to be higher than in August and above the upper limit of the target.

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