BELGRADE: Serbia's central bank held its benchmark interest rate, the highest in the region, at 3 percent on Thursday, based on strong economic growth, a stable dinar currency and inflation that is within its target.
All 13 analysts and traders polled this week and last forecast the central bank's Executive Board would leave borrowing costs unchanged on Thursday.
In a statement, the Executive Board said that anticipated movements in inflation and effects of policy easing so far motivated it to keep borrowing costs unchanged.
It also said that it will remain cautious over commodity prices, the rate policies of the US Federal Reserve and the European Central Bank.
"Prospects for global economic growth are less favourable and ... the FED and the ECB have recently indicated a possibility that normalisation of their monetary policies would be slower than expected. ... which could affect instability in global movements of capital," the bank said in a statement.
The bank also kept rates on hold last month. It last cut interest rates by 25 basis points in April 2018.
On Monday, the International Monetary Fund praised Serbia's 2018 economic growth, expected to come in at around 4.4 percent, the fastest in decade.
The lender said Serbia's gross domestic product should grow 3.5 percent this year as low base effects from 2017 and 2018 wane. According to a flash estimate, Serbia's economy grew 3.5 percent in the fourth quarter of last year.
Inflation stood at 2 percent in December, firmly inside the central bank's target range of 3 percent, give or take 1.5 percentage points. January inflation data will be announced on Feb. 22.
Serbia relies on its high benchmark rates to lure emerging market investors.
After the rate decision, the dinar traded at the rate of 118.38, roughly in line with the previous close. A Reuters currency poll indicated the dinar might weaken 0.6 percent to 119 to the euro in 2019.
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