Further Interest Rate Hikes On The Cards

The National Bank of Serbia (NBS) held rates at 15.75% on 17 July. We anticipate that further tightening lies ahead in the second half of the year, with our end-2008 forecast for the key 2-week repo rate unchanged at 16.25%. While the statement released by the NBS gave no reason for their decision, we believe that the bank is waiting for July inflation data and for the budgetary plans of the new government before proceeding with any further changes to monetary policy.

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