Serbia’s central bank kept its benchmark interest rate unchanged at 5.75% on April 9, where it has been since September 2024, citing heightened uncertainty amid geopolitical tensions and rising global energy prices following the war in Iran.

The National Bank of Serbia (NBS) said that its executive board also left the deposit facility rate at 4.5% and the lending facility rate at 7%.

The decision was based primarily on current and expected inflation trends, as well as risks from the international environment that could influence price developments, the bank said in a statement.

Annual inflation in Serbia remained below the central bank’s target midpoint at the start of the year, standing at 2.5% in February, the NBS said.

Prices of food and non-alcoholic beverages fell 0.7% year-on-year in February, partly reflecting government measures to cap retail and wholesale trade margins on certain products between September and March.

However, the bank noted that escalating geopolitical tensions and conflict in the Middle East have pushed up global oil prices in recent weeks, posing risks for inflation in the energy-importing Balkan country.

“Given that Serbia is a net importer of energy products, higher oil prices are reflected in rising domestic fuel prices, while the overall impact on inflation will depend on the duration and intensity of the conflict,” the NBS said.

The central bank added that higher energy costs could also affect container transport prices, fertiliser costs, supply chains, investment and consumer confidence, as well as flows of goods and capital already strained by rising global protectionism.

Authorities have introduced measures to cushion the impact of higher oil prices, including a ban on petroleum product exports and reduced fuel excise duties to limit spill-over effects on broader inflation.

Despite the global uncertainty, the NBS still expects inflation to remain within its target band of 3% plus or minus 1.5 percentage points by the end of the year.