TheNational Bank ofSerbia lowered its main rate by 0.25 percentage point to 4% andnarrow the interest rate corridor relative to the key policy rate to plus/minus1.50% from plus/minus 1.75%

Theregulator said that low inflationary pressures, stemming mostly from domesticfactors, will persist in the period ahead, with the rate cut aimed at ensuringthe return of inflation within the target tolerance band in 2017.

Thecentral bank also highlighted "elevated uncertainties in the internationalenvironment" that call for a cautious monetary policy, pointing to theimpact of the Brexit referendum on international markets, including emergingeconomies. It expects, however, for those external risks to be weakened bySerbia's improved macroeconomic performance, as well as "possible furthermonetary accommodation by the ECB and the Bank of England and slower thaninitially expected monetary tightening by the Fed."

Themost recent rate cut, also by 0.25 percentage point, was carried out by theNational Bank of Serbia in February 2016.