NBS Increases Key Policy Rate for the Second Time in a Row

At today’s meeting, the NBS Executive Board voted to raise the key policy rate by 50 bp, to 2%.

The Executive Board also decided to increase the deposit and lending facilities rates by 50 bp each, to 1% and 3%, respectively.

– Such decisions were made as inflationary pressures in the global and domestic markets continued to be stronger and more persistent than anticipated, calling for additional monetary tightening in order to contain second-round effects on inflation expectations and a further rise in inflation – the NBS announced.

As said, with a view to curbing inflation in the coming period, the Board raised the key policy rate for the second consecutive time, thereby proceeding with monetary policy tightening, which began last October through gradual increasing of the weighted average rate in the auctions of repo sale of securities – by total 110 bp to date.

Also, it is pointed out that the Executive Board stresses that interventions by selling foreign exchange in the local FX market had a twofold effect – they not only maintained relative stability of the exchange rate, but also helped tighten monetary conditions by absorbing a substantial amount of dinar liquidity.

Narodna banka Srbije Beograd

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