BELGRADE: Serbia's central bank is expected to keep the benchmark rate at 3.5 percent on Thursday, as the dinar exchange rate remains strong and inflation is inside the bank's target, a poll showed on Tuesday.
The country also wants to keep investors interested as more rate hikes by the US Federal Reserves are expected in 2018.
Eleven out of 12 analysts and traders polled by Reuters this week and last said the central bank would leave the rate unchanged. One saw a cut of 25 basis points.
Since the last rate setting meeting in December, the dinar has rallied 0.8 percent to the euro. To tame dinar gains on the interbank market, the central bank sold 75 million euros since Jan 1.
Inflation stood at an annual 2.8 percent in November, well inside the central bank's target of 3 percent, give or take 1.5 percentage points, and stagnated on the month. The Statistics office is scheduled to release December inflation data on Jan 12.
"We see the Serbian central bank remaining on hold at 3.5 percent ... amid stable inflationary developments and improving economic conditions," the Erste Group Research said in an analysis this week.
The bank may also decide to keep rates on hold on anticipation the US Federal Reserve could raise interest rates two or three times this year, as such a move could deter investors from emerging markets including Serbia.
Last month, the Serbian central bank said that low inflation forecasts and the expected effects of policy easing this year led it to keep rates on hold. It also cited "uncertainty on international financial markets."
Serbia's growth in 2017 was sluggish at an estimated 1.9 percent. The International Monetary Fund cut its estimate for 2017 economic growth to 2.3 percent from 3 percent. It kept its 2018 forecast at 3.5 percent.
Comments
Comments are closed for this article.