BELGRADE: Serbia's central bank is seen keeping its benchmark rate at 3 percent when its executive board meets on Thursday, on low inflation and country's positive economic performance, mostly supported by domestic demand, a poll showed on Tuesday.
All 11 analysts and traders polled by Reuters this week and last said the central bank would leave the rate unchanged.
The country's economy expanded by 4.6 percent in the first quarter and is expected to grow around 3.5 percent for the whole year.
Inflation in April fell to 1.1 percent, well below the central bank target corridor of 3 percent, give or take 1.5 percentage point. The Statistics Office will announce May inflation data on June 12
In a note, the Erste Group said rising employment and an increase in wages in both private and public sectors will influence a gradual rise in inflation which should spur the central bank to keep rates unchanged after cuts in March and April.
"In addition, we expect that the central bank wants to keep its manoeuvring space to react in the event of additional stronger pressures on the dinar," it said.
The Serbian dinar rallied around 0.23 percent to the euro so far in 2018, prompting the bank, which keeps it in a managed float against the common currency, to buy around 1 billion euros on the local interbank market to prevent excessive gains.
Last month, the central bank said that its decision to keep the rate on hold was mainly guided by the expected rise in inflation and the effects of past monetary policy easing.
The bank would also closely monitor the moves of the United States Federal Reserve and the European Central Bank this year, as foreign investors play a key role on the local debt market.
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