NBS leaves rates unchanged in May

NBS keeps rates on hold: At its meeting on 7 May, the National Bank of Serbia (NBS) kept the key policy rate unchanged at 5.75%, where it has stood since September 2024.

Temporary inflation spike expected: The NBS refrained from cutting as it expects inflation to rise moderately in the coming months, largely the result of higher global oil prices pushing up domestic fuel costs and a low base of comparison toward the end of the year—a cap on retail margins was introduced in September 2025. At the same time, the Bank refrained from hiking, viewing the anticipated inflation pickup as temporary, peaking in late 2026 or early 2027.

Energy price shock clouds the outlook: The NBS did not provide specific forward guidance on future decisions. Last month, our panelists began to raise their forecasts to account for the effects of the U.S.-Iran war on energy prices; the majority of our panelists now foresee remaining on hold by the end of 2026, while the remainder still anticipate cuts of 25–100 basis points. The next meeting is scheduled for 11 June.

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