Free Trial

Serbia Central Bank Accelerates Tightening Cycle Pace with 50bps Hike

  • The National Bank of Serbia (NBS) accelerated the pace of its tightening and hiked the policy rate by 50bps to 3.5% (vs. 25bps exp.).
  • It is the sixth time that the NBS is raising its benchmark rate (NBS has tightened by 250bps in total since March) as inflationary pressures have remained elevated in the entire CEE region.
  • Economic data showed last month that Serbian inflation accelerated to 12.8% in July (vs. 12.3% exp.), its highest level since January 2013, up from 11.9% the previous month.
    • Next CPI print will come out on September 12, with CPI expected to increase to 13.3% in August.
  • Prior the Ukraine war, it is likely that Serbia had been partly relying on its CEE peers' 'effort' (NBP, CNB and NBH), hoping that the gradual decline in inflation in H2 2022 will also have an impact on the domestic inflation. This explains why Serbia has the lowest policy rate among the CEE region (after Bulgaria).
  • In addition, as the Serbian Dinar (RSD) seems pegged to the EUR at 117.60, the NBS may mirror the ECB policy outlook in order to avoid currency interventions as rising interest rate differential will drive RSD higher (vs. Euro).
  • To the exception of Bulgaria, all central banks in the CEE region have now entered a tightening cycle (chart below).

Source: Bloomberg/MNI

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.