Serb central bank holds rate before Brexit poll, new govt

Bloomberg

Serbia’s central bank left borrowing costs unchanged for a third month, refraining from easing ahead of the U.K.’s vote on whether to leave the European Union and the formation of a new government following April snap elections.
The National Bank of Serbia left its one-week repurchase rate unchanged at 4.25 percent, according to a statement published on its website on
Tuesday.
“Despite weak inflation pressures and continued improvement in macroeconomic indicators, uncertainties in global commodity and financial markets persist and call for caution in monetary policy,” the bank said in the statement.
“Inflation should gradually start to increase as of may and return to target range at the beginning of next year.”
The central bank has cut its main rate 16 times since 2013 from 11.75 percent to help spur inflation and counteract slowing demand caused by fiscal consolidation by Prime Minister AleksandarVucic’s government.
The premier, who won a new four-year term in April 24 elections, is seeking to push through measures agreed with the International Monetary Fund and prepare the biggest former Yugoslav republic for the EU membership by 2020.
The yield on Serbian dollar bonds maturing in 2021 rose 1 basis point to 4.167 percent at 12:02 p.m. in Belgrade The dinar traded little changed at 122.6360 against the euro.
Brexit, Fed
External factors including the U.K. referendum on a potential exit from the European Union and the U.S. Federal Reserve’s meeting next month were also probably key reasons behind the bank holding fire, UniCredit analysts Dan Bucsa and DumitruVicol said in a note the day before the rate decision. “The central bank will probably refrain from cutting rates for as long as external financing remains problematic” Bucsa and Vicol said.