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Serbia raises interest rates for first time since 2008

Banking

Image by Bobica10 / Shutterstock.com

The National Bank of Serbia hiked its main interest rate by 50 basis points to 1.5%, the first rise in borrowing costs since 2008, while rates on deposit and credit facilities were lifted to 0.5% and 2.5%, respectively, according to a report by Tradingeconomics.com.

The move comes as the economy faces rising inflationary pressures due to global supply snags, made worse by the Ukraine crisis.

The headline inflation rate jumped to 8.8% in February, the highest since June 2013 and well above the central bank's target of 1.5%-4.5% due to rising energy and raw material prices.

Still, the central bank noted that the current tightening of monetary conditions would not significantly affect economic activity in our country, pointing to higher levels of investment and private consumption. 

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