Serbia Interest Rate

The National Bank of Serbia left the reference interest rate steady at 6% in August, as anticipated, following two successive cuts of 25 bps each in July and June. This pause in monetary easing provides the central bank with an opportunity to evaluate the effects of these rate reductions amid a backdrop of slowing inflation and robust economic growth. Domestic inflation dropped below the 4.5% target range in June and is expected to remain within the target range of 3±1.5% throughout the forecast period. The latest projection from the central bank indicates that inflation should decelerate and approach the 3% central target over the coming year, despite a temporary rise in July. Additionally, economic activity in the second quarter showed a year-on-year growth of 4.2%, surpassing earlier expectations from the May projection. Deposit and lending rates were maintained at 4.75% and 7.25%, respectively.