National Bank of Serbia Cuts Rate 75bps to 10.00%

The National Bank of Serbia cut its 2-week repo rate by 75 basis points to 10.00% from 10.75% previously.  The Bank said: "Inflation continued down, in accordance with the NBS projection from the August Inflation Report. It is expected to decline further in the coming period. The key disinflationary factors will be weaker cost-push pressure on food prices, low aggregate demand and slower growth in administered prices. The process of disinflation will also be aided by the continued drop in inflation expectations."

The Bank also cut the interest rate by 50bps in October, and 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 8th of December.  The Serbian Dinar (RSD) last traded around 74.3 against the US dollar.

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