08/10/2026
At its meeting today, the NBS Executive Board voted to keep the key policy rate at 5.75%. It also kept the deposit facility (4.5%) and lending facility (7.0%) rates unchanged.
In making the decision, the Executive Board primarily took into account actual and expected inflation, as well as risks from the international environment that could affect its trajectory.
Although the escalation of the conflict in the Middle East initially did not generate significant inflationary effects globally, challenges have increased further since the summer, as crude oil prices have resumed their upward trend, accompanied by rising natural gas and electricity prices. So far, the reduction in excise duties on petroleum products and the use of available energy reserves have helped mitigate more pronounced effects on petroleum product prices in the domestic market. Nonetheless, should the conflict in the Middle East persist or geopolitical tensions intensify further, the possibility cannot be ruled out that the effects could spill over to production and transport costs globally, supply chains and capital flows, and consequently to inflation. For Serbia, as a small and open economy that is heavily dependent on energy imports, it is essential to continue closely monitoring these risks, the Executive Board emphasized.
Y-o-y inflation accelerated slightly in August, to 2.2% from 1.9% in July, primarily due to the persisting energy shock and higher global oil prices. The Executive Board expects that the low last year’s base arising from the application of the decree capping trade margins will cause inflation to hover around 4% as of September this year. The Board emphasized that, according to the NBS’s latest medium-term projection from August, y-o-y inflation is expected to continue moving within the target tolerance band until the end of the projection horizon, i.e. over the next two years, although risks are now tilted upward due to the prolonged energy shock and higher-than-expected growth in global prices of other primary commodities.
Economic activity in the first half of this year was 3.5% higher than in the same period of the previous year, with the services continuing to make the largest positive contribution, driven by an increase in private consumption. Activity also increased in manufacturing, mining, construction and agriculture. Monthly indicators for July and August suggest that the services sectors continued to make the largest contribution to economic activity in Q3, while industrial production has been affected by the drought and lower water levels. The Executive Board expects economic growth to amount to at least 3.2% this year and to accelerate to around 4.5% next year. The main driver of economic activity growth is expected to be domestic demand, with both consumption and investment providing a positive contribution, supported by higher disposable income and further implementation of infrastructure projects under the “Leap into the Future – Serbia EXPO 2027” programme.
The NBS continues to implement a cautious monetary policy while maintaining relative stability of the exchange rate. Going forward, the Executive Board will make decisions based on incoming data and their implications for inflation outlook. If assessed that the increase in global oil prices has stronger second-round effects on other prices through inflation expectations, the NBS will respond using all available instruments.
The next rate-setting meeting will take place on 12 November.
Governor’s Office
