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Serbian central bank lowers policy rate to 2.5%

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Serbian central bank lowers policy rate to 2.5%

The National Bank of Serbia further slashed its key policy rate by 25 basis points to 2.5% amid a further decline in inflation and policy easing of leading central banks.

The central bank said inflation slowed to 1.5% in June from 2.2% in May, still well within the target tolerance band of 3%, plus or minus 1.5 percentage points, where inflation is expected to trend over the next two years.

In making the rate cut, the central bank also cited the slowdown in global trade and economic growth, and the corresponding actions by the Federal Reserve and the European Central Bank.

In July, the Fed lowered its benchmark interest rate by 25 basis points in a move described as a "mid-cycle adjustment," while the ECB opened the door for policy easing by saying that rates are expected to remain at their "present or lower levels" at least through the first half of 2020.