The National Bank of Serbia kept its key policy rate at 5.75%, with the deposit and lending facility rates unchanged at 4.5% and 7.0%, respectively. The decision reflects inflation remaining within the target tolerance band alongside growing upside risks from higher global energy and other commodity prices. Year-over-year inflation rose to 2.2% in August from 1.9% in July, primarily because of the continuing energy shock and higher oil prices. Inflation is expected to hover around 4% from September due to a low prior-year base associated with the decree capping trade margins, while remaining within the target tolerance band over the next two years. The reduction in petroleum excise duties and use of energy reserves have limited domestic price effects, but a prolonged Middle East conflict could raise global production and transport costs and disrupt supply chains and capital flows. Economic activity increased 3.5% in the first half from a year earlier, led by services and private consumption. The central bank expects growth of at least 3.2% in 2026 and about 4.5% in 2027, supported by consumption, investment and infrastructure projects. It will respond with available instruments if higher oil prices produce stronger second-round effects through inflation expectations, with the next rate-setting meeting scheduled for Nov. 12.
National Bank of Serbia holds key policy rate at 5.75% as energy risks tilt inflation outlook upward
The National Bank of Serbia held its key policy rate at 5.75% and kept its facility rates unchanged. Inflation is projected to remain within the target tolerance band over the next two years, although prolonged energy pressures have tilted risks upward. The central bank expects economic growth of at least 3.2% in 2026 and about 4.5% in 2027.