Page 80 - SE Outlook Regions 2024

The NBS said in a statement that the decision was based on the easing of global inflationary pressures as well as the downward trajectory of inflation within Serbia and its expected return within the target band in mid-2024.
“Moreover, monetary conditions in the past period were tightened by means of the main instrument – the interest rate, and in September by increasing the required reserve ratio, with the full effects of these measures yet to play out,” the central bank said.
“The transmission of past monetary tightening onto the interest rates in the money, lending and savings markets signals the effectiveness of the monetary policy transmission mechanism.”
In making its decision, the NBS considered the ongoing decline in global inflationary pressures. Within the euro area, Serbia’s main trading partner, inflation continued to decrease in November, primarily attributed to declining energy costs and subdued growth in the prices of food and services. Apart from the diminishing global inflation, the executive board factored in the sluggish global economic growth, persistently below its long-term average, influenced by worldwide central banks' monetary policy tightening aimed at curbing inflation.
With the easing of inflation and a slowdown in economic activity, leading central banks like the European Central Bank (ECB) and the US Federal Reserve are anticipated to start monetary policy easing earlier than initially expected.
However, robust labour market pressures, identified by central banks as significant factors, warrant caution in monetary policy decisions, the bank noted. Additionally, caution is warranted due to uncertainties surrounding energy prices and geopolitical tensions globally, despite the stabilisation of global oil prices in November.
The NBS board highlighted the importance of the stabilisation of the basic foodstuffs market, aided by reduced cost-push pressures in food production, as evidenced by a 2.1% decline in producer prices in the food industry throughout November.
80 SE Outlook 2024 www.intellinews.com