Monetary policy

In accordance with the Law on the National Bank of Serbia, the primary objective of the NBS is to achieve and maintain price stability, thereby contributing to financial system stability and sustainable economic growth. To achieve price stability, the NBS implements the inflation targeting regime. The monetary policy objective is expressed as a numerical target – annual percentage change in the Consumer Price Index. The target until end-2023 is 3.0%, with a tolerance band of ±1.5 pp. 

The key policy rate is the main monetary policy instrument in the inflation targeting regime, while other instruments, including interventions in the FX market, have a supporting role. The key policy rate, applied by the NBS in its open market operations (currently reverse repo transactions, i.e. repo sale of securities with one-week maturity), represents an operating  target for short-term interest rates in the money market. Its role as the operating target is supported by the corridor of interest rates on deposit and lending facilities and by other open market operations.

Other monetary policy instruments have a supporting role – they contribute to the smooth transmission of the key policy rate to the market, as well as to the development of financial markets. These instruments include open market operations, required reserves, lending and deposit facilities (standing facilities) and interventions in the FX market.