The National Bank of Serbia (NBS) has decided to maintain its key interest rates, reflecting a stable inflation outlook and economic resilience amidst global uncertainties. At a recent meeting, the NBS Executive Board resolved to keep the reference interest rate steady at 5.75%. Additionally, the rates for deposits and credit facilities remain unchanged at 4.5% and 7.0%, respectively.

This decision comes as Serbia’s year-on-year inflation is reported at 1.9%, which is below the central target range of 3±1.5%. The central bank attributes this lower inflation rate primarily to a significant decrease in food prices, particularly fruits and vegetables, which have dropped by 18% compared to the previous year due to an exceptionally good harvest. The NBS projects that inflation will hover around 4% through 2027, indicating a stable economic outlook.

The Serbian economy has shown resilience, with real GDP growth for the second quarter of 2026 reported at 3.8% year-on-year, surpassing initial estimates of 3.6%. This growth is largely driven by the service sectors, boosted by increased private consumption, and a recovery in industries such as manufacturing, mining, construction, and agriculture. The NBS had previously revised its economic growth projection for the year to 3.2%, up from earlier estimates, and maintains a 4.5% growth projection for 2027.

The labor market also reflects positive trends, with the unemployment rate dropping to 7.2% in the second quarter of 2026, marking its lowest recorded level. The NBS emphasizes the importance of domestic demand as a key driver of economic activity, supported by rising disposable income and ongoing infrastructure projects under the “Leap into the Future – Serbia EXPO 2027” program.

Despite these positive indicators, the NBS remains cautious about potential external risks, particularly geopolitical tensions and energy price fluctuations. The ongoing conflict in the Middle East and elevated global oil prices pose uncertainties that could impact inflation and economic activity. The NBS notes that while the effects of these global developments have been less severe than initially anticipated, continued vigilance is necessary due to Serbia’s reliance on energy imports.

In response to these challenges, the NBS is committed to maintaining a prudent monetary policy and ensuring the relative stability of the exchange rate. The Executive Board will continue to make decisions based on incoming data and their impact on inflation trends. Should global oil prices exert more pronounced secondary effects on other prices through inflation expectations, the NBS is prepared to respond with all available instruments.

The decision to hold interest rates steady is significant for consumers and businesses in Serbia, as it suggests a stable borrowing environment. However, the potential impact on consumer credit and broader economic growth remains to be fully seen. The NBS’s approach reflects a balance between supporting economic growth and managing inflation risks, a challenge faced by many central banks globally amidst volatile economic conditions.