NBS again leaves rates unchanged in July

NBS remains on hold, as expected: At its meeting on 9 July, the National Bank of Serbia (NBS) kept the key policy rate at 5.75%, where it has stood since September 2024. The decision was widely expected by the market.

NBS maintains cautious stance amid looming above-target inflation: The NBS’ statement differed little from those of prior months: The Bank has maintained a cautious policy position since the U.S.–Iran war erupted in late February, refraining from cuts, as it sees inflation rising modestly to above its 1.5–4.5% target range by the end of the year on rising energy costs and a low base from September 2025—when a 20% retail margin cap was introduced. Still, the Bank refrained from hiking, as it expects inflation to return within the target band by mid-2027.

NBS to hold rates through year-end: While the NBS did not provide specific forward guidance on future decisions, it noted that it could tighten monetary policy if the Iran energy price shock had stronger-than-expected second-round effects on overall prices. Most of our panelists foresee interest rates remaining on hold through the end of 2026, as inflation is seen accelerating through year-end, in line with the Bank’s projections; two see 25–50 basis points of cuts by year-end, likely reflecting their below-Consensus inflation projections for this year. The next meeting is scheduled for 13 August.

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