Serbia lifts key rate for a fourth month

Bloomberg

Serbia lifted its benchmark interest rate for a fourth month, the highest since July 2019, following in the footsteps of peers in eastern Europe to confront persistent price pressure.
The central bank in Belgrade increased the one-week repurchase rate by 25 basis points to 2.75%, a move that none of the 18 economists in a Bloomberg survey forecast. Eleven had seen an increase to 3%, while seven expected
no change at policy makers’ monthly meeting.
The National Bank of Serbia joined the region’s hike frenzy only in April, after defying the trend for months even as Serbia’s consumer-price index began gaining pace last year, breaching the Balkan nation’s tolerance band for prices of 1.5% to 4.5% to reach the levels last seen in 2013.
The annual inflation rate, at 10.4% in May, probably peaked in June and is likely to ease as of July, the head of the nation’s Statistics Office, Miladin Kovacevic, told RTS broadcaster. The headline figure for the past month will be published on July 12.
The monetary authority has said the consumer-price index would return to the target range only in the second half of 2023.
Energy and food prices have led the increases, but even core inflation, which excludes the volatile prices, has gone up, last reported at 6.3% for May.
Rate hikes helped eased pressure on the dinar, which the bank keeps in a narrow range against the euro using interventions on the local currency market. The bank spent more than 2.7 billion euros ($2.8 billion) from October to April to fend off depreciation pressures, but switched to net purchases in May, a sign of revived demand for the currency.