Serbian central bank keeps key policy rate on hold

In making the decision, the Executive Board was guided by the expected movement in inflation and its underlying factors, and the effects of past monetary policy easing, the National Bank of Serbia (NBS) announced in a press release, adding:

"Inflation has been low and stable for the sixth year in a row. In January it stood at 2.1 percent y-o-y. Core inflation is also low, at 1.2 percent y-o-y in January. Subdued inflationary pressures are further indicated by the one-year ahead inflation expectations of the financial and corporate sectors, which stand somewhat below the 3.0 percent midpoint. The Executive Board expects inflation to continue to move within the target tolerance band (3.0±1.5 percent) in the coming period."
Caution in monetary policy conduct is still mandated, most notably because of developments in the international environment, the central bank warned.
"As global economic growth slows, the normalization of monetary policies of leading central banks, the Fed and ECB, is expected to be slower as well. It, however, remains uncertain to what extent the normalization will be slower and different from market expectations, which may trigger the volatility of global capital flows. After falling in late 2018, global oil prices have regained some ground early this year, but both demand- and supply-side factors make their future movements uncertain. Though trade tensions between the world's leading economies have abated recently, protectionism in international trade, as well as geopolitical tensions, remain, which perpetuates uncertainty regarding the outlook for international commodity and financial markets," it said.
The Executive Board emphasized that Serbian economy's resilience to potential adverse effects from the international...