BELGRADE: Serbia's central bank raised its main interest rate by 20 basis points to 10.95 percent on Thursday, citing rising inflation, increasing borrowing costs at a time when most eastern European countries are cutting theirs.
"The increase of restrictiveness of the monetary policy is a reaction to increased inflationary pressures and (it is) aimed at the prevention of the spillover effects of ... food price increases, to other prices," the bank said in a statement.
Serb inflation in September rose to 10.3 percent, up from 7.9 in August after the government sought to finance its budget gap, projected at 6.2 percent in 2012, through a hike in value-added tax.
The central bank has said inflation could reach 12 percent this year.
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