At the presentation of its May 2026 Inflation Report, the National Bank of Serbia said it had revised up its inflation projection and lowered its GDP growth forecasts because the conflict in the Middle East has pushed up global energy prices, while leaving the policy rate unchanged at 5.75% since September 2024. Inflation is now expected to stay within the target band in the second and third quarters of 2026, move temporarily slightly above the upper bound in late 2026 and early 2027, and return to the band with average inflation at the upper bound by the second quarter of 2027. Consumer price inflation stayed below the 3% target midpoint in the first quarter and rose to 3.3% in April from 2.8% in March, almost entirely because of higher global oil prices, while core inflation has remained just above 4% and medium-term inflation expectations are still around target. The GDP growth forecast for 2026 was cut to 3.0% from 3.5% and for 2027 to 4.5% from 5.0%, after first quarter growth came in at 3.0%, and the current account deficit is projected at about 6% of GDP this year before narrowing to about 4% in 2027. The forecast assumes the energy shock is temporary, with global oil and other commodity prices starting to fall in the third quarter of 2026, and a better agricultural season than in 2025. The bank said future monetary policy decisions will depend on the duration and intensity of the energy shock and the extent to which it feeds through to other prices via inflation expectations.
National Bank of Serbia 2026-05-13
National Bank of Serbia raises inflation forecast and cuts 2026 GDP growth outlook to 3.0 percent amid Middle East energy shock
The National Bank of Serbia, in its May 2026 Inflation Report, raised its inflation projection and cut 2026–2027 GDP growth forecasts, citing higher global energy prices from the Middle East conflict, while keeping the policy rate at 5.75%. Inflation is seen within target through Q3 2026, slightly above the band in late 2026–early 2027, then back within it by Q2 2027, assuming a temporary energy shock and easing commodity prices from Q3 2026. The bank projects a current account deficit of about 6% of GDP in 2026, narrowing to about 4% in 2027, and said monetary policy will depend on the duration of the energy shock and its pass-through to prices and expectations.