The Executive Board of the National Bank of Serbia (NBS) decided to keep the key rate at 6.5%, the tenth month in a row, amidst still elevated (though falling) global inflation risks. While a rate cut could be made as soon as in June, we also see risks of a delay until July. |
The Executive Board of the National Bank of Serbia (NBS) decided to keep the key rate at 6.5%, for the ninth month in a row. Local price developments support a scenario of a rate cut already in Q2 but upside risks for US rates may affect the timing of first cuts by NBS. |
We are eagerly awaiting next week's Fed and SNB meetings and the signals they will send to currency markets. Hawkish signals from the Fed would push EUR/USD back towards a stronger dollar, while interest rate speculation about the SNB has currently given EUR/CHF an upward boost. For Poland, the question of interest rate cuts still does not arise, which has given the PLN a tailwind, among other things. The recent weakness of the HUF, on the other hand, could reduce the MNB's room for manoeuvre. This shows once again that the interplay between exchange rates and central banks is not a one-way street. This issues features
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The monthly dynamics in retail prices accelerated further in February (+0.6% mom) after 0.3% mom growth in January. Annualized print slowed to 5.6% yoy, down from 6.4% yoy in January. |
The Executive Board of the National Bank of Serbia (NBS) decided to keep the key rate unchanged at 6.5%, amidst the still elevated geopolitical risks. We continue to expect a launch of gradual cuts in Q2. |