The National Bank of Serbia (NBS) announced on Thursday that it would maintain its main policy rate at 5.75%, keeping the deposit facility rate at 4.5% and the lending facility rate at 7.0%. This continues a pause in rate adjustments that has been in effect since September 2024.
Market participants had expected the decision. In its accompanying statement, the central bank described its approach as a wait-and-see posture, noting that the principal new element shaping its policy outlook is a Middle East energy shock. The NBS singled out that development as the main recent factor weighing on its deliberations.
Alongside the decision to hold rates, the bank set out a projection that now explicitly foresees a temporary breach of the upper bound of its inflation tolerance band around the fourth quarter of 2026. The NBS retains an inflation target of 3.0%, operating with a symmetric tolerance interval of plus or minus 1.5 percentage points.
The decision and the bank's updated projection do not alter the numerical policy settings but do signal that the NBS is monitoring developments that could push inflation beyond its comfortable range in the medium term. By stating a prospective temporary overshoot of the upper tolerance level, the central bank has flagged a potential near-term deviation from its target band without specifying policy moves to counter that possibility.
Officials emphasized readiness to react to incoming data while remaining on hold for now. The watchful posture reflects the central bank's assessment that recent geopolitical-driven energy developments are the dominant new risk to the inflation outlook and thus to the timing of any adjustment in monetary policy.
Contextual note - The NBS decision preserves the current policy corridor and maintains the same numerical settings announced earlier: 5.75% for the key policy rate, 4.5% for the deposit facility and 7.0% for the lending facility. The new projection of a temporary breach of the upper tolerance bound is timed around the fourth quarter of 2026, consistent with the bank's stated inflation target and tolerance band.