June 7 (SeeNews) - Erste expects Serbia's central bank to keep its accommodative and growth-supportive monetary policy throughout the year, the Austria-based banking group said.
"Looking forward, we reiterate our view that the central bank will hold the key rate unchanged throughout the year, closely monitoring inflation and external environment developments," Erste said in a market note on Thursday.
Serbia's central bank, the NBS, said on Thursday it decided to keep its key repo rate unchanged at 3.0%. NBS last changed the key repo rate in April 2018 when it was lowered to 3.0% from 3.25%.
The slowdown of economic growth in the first quarter, the dovish policy of global central banks, low inflation and disinflationary pressures stemming from dinar strength underpin the decision to leave rates unchanged, Erste said.
"NBS has been heavily intervening on the FX market lately, countering dinar strength and boosting its FX reserves in the process. Generally, NBS's active policy mix is a guarantee of sufficient dinar liquidity underpinning the stability of short-end money market rates," Erste analysts added.
On Tuesday, the central bank said the Serbian dinar reached on June 4 its highest level against the euro since September 2014 as international investors put money into bonds denominated in the local currency.
From January 1 to June 3, the central bank bought 380 million euro ($430.3 million) from local commercial banks and sold 130 million euro, in order to maintain the stability of the forex market.
($ = 0.883124 euro)