BELGRADE: Serbia's central bank is expected to keep its benchmark rate at 3.25 percent when its executive board meets on Thursday, opting to remain cautious after a cut last month amid a strong currency and low inflation, a poll showed on Tuesday.
Ten out of 11 analysts and traders polled by Reuters this week and last said the central bank would leave the rate unchanged. One anticipated a 25-basis-point cut.
So far this year, the dinar has gained around 0.2 percent against the euro, while inflation fell to an annual 1.5 percent in February, from 1.9 percent in January - still inside the bank's target of between 1.5 percent and 4.5 percent.
Last month, the bank said that a slowdown in inflation motivated it to reduce the rate.
The Statistics Office is scheduled to announce March inflation data on April 12.
Sasa Djogovic, an economist with Belgrade's Institute for Market Research (IZIT), said the bank might hold the rate as it expects future hukes by the US Federal Reserve.
"Perhaps, the central bank believes investors could turn to American bonds and leave emerging markets such as Serbia, but there's space for a cut due to an inflow of investments, good yields on Serbian maturities and Serbia said it wants a new arrangement with the IMF," Djogovic told Reuters.
Last month Serbia confirmed its interest in a new deal with the International Monetary Fund that will focus on reforms to boost economic growth.
To tame dinar gains, the central bank has so far bought 620 million euros and sold 180 million in currency interventions on the local market. The bank keeps the dinar in a managed float.
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