EUR/RSD: No room for deviation
After raising the policy rate by 500bp to 6.00% in just over a year, the National Bank of Serbia seems to be taking its time now and contemplating the effects of past monetary tightening.
We believe that the next policy decision will be a rate cut in first quarter 2024 when we will finally have positive real rates. We do not envisage headline inflation back within the NBS’s 1.5%-4.5% target range over the next two years.
We maintain our expectations for an essentially flat EUR/RSD profile for the rest of 2023 and even through 2024, with FX intervention likely to occur in a rather narrow range around the 117.30 level.
