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Serbia Inflation Surges To Highest Level Since August 2013

CEE
  • Economic data showed earlier that inflation in Serbia surged to 6.6% YoY in October (vs. 5.9% exp.), its highest level since August 2013, and up from 5.7% the previous month.
  • The chart shows that inflation has been diverging significant from the NBS 4.5-percent upper tolerance band.
  • Unlike its CEE peers, which have embarked into a tightening cycle in recent months to curb the inflationary pressures, the National Bank of Serbia has kept its benchmark rate steady at 1% in recent meetings.
  • Policymakers reiterated several times that inflation is driven by factors outside monetary policy realm (i.e. supply side issues).
  • It is important to note that the Serbian Dinar (RSD) seems pegged to the Euro at 117.60.
  • Hence, the central bank may mirror the ECB policy outlook in order to avoid currency interventions in order to prevent the dinar from appreciating too much.

Source: Bloomberg/MNI

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