Friday, October 7, 2011

National Bank of Serbia Cuts a Further 50bps to 10.75%

The National Bank of Serbia cut its 2-week repo rate by another 50 basis points to 10.75% from 11.25% previously.  The Bank said: "The Executive Board expects that inflation will continue to decline and that it will enter the target tolerance band in the first half of the next year. The future path of the key policy rate will depend on the achievement of projected inflation, and on the materialisation of risks, primarily those stemming from the international environment and fiscal policy at home."

The Bank also cut the rate 50bps in September, after pausing in August, while previously the Bank reduced the 2-week repo rate by 25 basis points to 11.75% at its July meeting, and cutting the rate 50 basis points at its June meeting to 12.00%.  Serbia reported inflation of 10.5% in August, compared to 12.1% in July, 12.7% in June, 13.4% in May, 14.7% in April, and above the bank's inflation target range of 3-6%.  

The IMF is forecasting 2011 GDP growth in Serbia of 2%, and 3% in 2012.  The Bank next meets on the 11th of November.  The Serbian Dinar (RSD) last traded around 75.78 against the US dollar.


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