National Bank of Serbia stands pat in April

Central Bank remains on hold: At its meeting on 10 April, the National Bank of Serbia (NBS) executive board kept the key policy rate unchanged at 5.75%, where it has been since September 2024. The decision was aligned with market expectations.

NBS remains cautious amid global economic uncertainty: The Bank noted that inflation has stabilized around the upper bound of the 1.5-4.5% tolerance band, and added that it expects a decline in the second half of the year due to a still-tight stance, a better agricultural season, lower oil prices and imported inflation, and a slowdown in real wage growth. Nonetheless, heightened economic uncertainty stemming from global tariffs dissuaded the NBS from resuming monetary loosening.

Central Bank to cut: The NBS provided no specific forward guidance on future interest rate movements, stating instead that it will continue to closely monitor domestic and international market trends. Our Consensus is for the Bank to reduce rates by around 75 basis points by the end of 2025 as inflation moderates, with most of our panelists expecting the first rate cuts in Q2. The next meeting is set for 9 May.

Panelist insight: Mate Jelic, analyst at Erste Bank, commented: “If inflation develops according to forecasts, it will make sense to ease monetary policy later this year, but pinpointing the exact timing is exceedingly difficult in the current hectic global surrounding. Our base case is NBS will deliver the first cut in July, as we expect inflation under 4% y/y by then. However, given turbulent but global and local developments, we expect the central bank will remain cautious, delivering only two cuts this year in total.”

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