Key policy rate kept unchanged
Central bank: nbs | Type: statement | Date: 2026-05-07

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 this 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 y-o-y inflation remained below the target midpoint during Q1 and amounted to 2.8% in March, the NBS Executive Board expects it to record a moderate increase in the period ahead, primarily due to a significant rise in global oil prices and, consequently, higher petroleum product prices in the domestic market. Towards the end of the year, higher inflation will also be affected by the low base arising from the implementation of the Decree on Special Conditions for Trade in Certain Types of Goods, which led to a notable decline in inflation late last year. However, despite the increase in global prices of primary commodities and energy, the Board expects the rise in inflation to be temporary, with the peak in the current cycle likely to be recorded towards the end of this year and at the beginning of next. As anticipated by the Executive Board, the expiry of the Decree in February this year did not lead to any major increase in trade margins or their return to pre-decree levels, as reflected in food prices, which in March were still lower than in the same period last year.Current global developments, notably the situation in the Middle East, could have a negative effect on container shipping prices, mineral fertilisers, value chains, investment and consumer confidence, as well as goods and capital flows. Also, as Serbia is a net energy importer, an increase in the global price of oil is directly mirrored by a rise in petroleum products in the local market, and can indirectly impact the prices of food, as well as of industrial products and services. On the other hand, higher costs and the consequently lower disposable income of households have an adverse effect on economic growth prospects. The final effects of the global energy shock on domestic inflation and economic activity are difficult to estimate as they depend on the duration and intensity of the conflict.According to the flash estimate of the Statistical Office of the Republic of Serbia, real GDP growth in Q1 amounted to 3% y-o-y. After challenges in January, primarily in petroleum product manufacturing and the chemical industry, February and March saw a pick-up in activity within the manufacturing industry, accompanied by an increase in its exports. At the same time, growth in retail trade and tourism stepped up significantly, indicating that the largest positive contribution to economic growth in Q1 came from services. In the coming period, positive contributions to GDP growth are expected from consumption and investments, with a significant role played by the implementation of investment projects within the "Leap into the Future - Serbia Expo 2027" programme. In 2027, a positive contribution is also expected from net exports as a result of hosting the Expo. Growth in lending activity to businesses and households, which accelerated to nearly 17% y-o-y in March, supported by favourable borrowing conditions, is providing significant support to economic growth. Nevertheless, economic activity remains affected by global uncertainty caused by geopolitical tensions and rising energy prices, which may negatively impact investment and consumer confidence, as well as capital flows.In such circumstances, the NBS continues to pursue a cautious monetary policy while maintaining relative stability of the exchange rate. If assessed that the increase in global oil prices is having more pronounced second-round effects on other prices through inflation expectations, the NBS will respond using all available instruments.At today's meeting, the Executive Board adopted the May Inflation Report with the latest macroeconomic projections that have factored in the ongoing energy shock. The Report will be presented to the public in more detail at a press conference on 13 May, along with additional explanations of monetary policy decisions.The next rate-setting meeting will take place on 11 June.

Governor's Office