The Executive Board of the National Bank of Serbia (NBS) has decided to tighten monetary policy by raising the benchmark interest rate by 25 basis points to 6%, the central bank announced.
The deposit facility rate was also increased to 4.75%, while the lending facility rate was raised to 7.25%.
The NBS said the decision was based on actual and projected inflation trends, as well as risks arising from domestic and international economic conditions.
“Taking into account realized and expected inflation movements in the coming period, as well as risks from the international and domestic environment that could affect inflation, the Executive Board concluded that an increase in the benchmark interest rate is an appropriate and timely measure,” the central bank said.
The move is intended to prevent the energy price shock from triggering broader price increases and to maintain price stability over the medium term.
Annual inflation in Serbia rose to 4.1% in September, in line with the central bank’s expectations. The increase was primarily attributed to a low comparison base from the previous year, particularly for food products and household chemicals, whose prices had been subject to government-imposed retail margin limits.
Rising fuel costs also contributed to inflation. Prices of petroleum products increased by more than 17% year over year, reflecting higher global oil prices. The increase would have been even greater without the government’s decision to reduce fuel excise duties.
The higher benchmark interest rate is expected to gradually affect borrowing costs, particularly for loans with variable interest rates.
Borrowers with variable-rate loans will be the first to feel the impact, although the changes will not take effect immediately. The adjustment will depend on the terms of individual loan agreements and the timing of interest rate revisions.
The decision means that households and businesses in Serbia could face higher borrowing costs in the coming months as the central bank seeks to contain inflationary pressures.
