Serbia entered the second half of 2026 with annual inflation at approximately 1.9% in July, while the National Bank of Serbia (NBS) continued to hold its key policy rate at 5.75%. The monetary environment combines relatively low price growth with comparatively high nominal interest rates, even as the economy is projected to expand by slightly more than 3% in 2026 and bank lending continues to grow at double-digit rates.
Inflation declines while credit continues to expand
The combination of falling inflation and strong borrowing growth has changed the conditions facing monetary policymakers.
With inflation close to 2%, the difference between the consumer-price growth rate and the 5.75% policy rate has become increasingly significant. If inflation remains around 2–3%, the real monetary-policy stance becomes progressively more restrictive. Lower interest rates could reduce financing costs for companies and households, potentially supporting investment and borrowing. At the same time, faster monetary easing could add further momentum to Serbia’s already strong credit expansion and increase domestic demand.
NBS maintains focus on inflation and currency stability
Despite the decline in headline inflation, the NBS continues to face several sources of potential price pressure. Food prices remain capable of changing rapidly, while risks in energy markets remain significant. Rising wages and Serbia’s exposure to imported inflation from European and global markets also remain relevant to monetary policy.
The dinar exchange rate is another important consideration. Maintaining confidence in currency stability has remained a central element of the NBS’s monetary-policy strategy. These factors provide reasons for continued caution even as headline inflation has moved substantially lower.
Domestic financing costs remain relatively high
Serbia’s economic growth is continuing at slightly above 3%, while credit is expanding at double-digit rates. Against this backdrop, the policy rate remains significantly above the current inflation rate. For Serbian businesses, the decline in inflation has therefore not yet translated fully into lower domestic financing costs.
The monetary-policy challenge has shifted from primarily containing inflation toward determining the pace at which policy can be normalised without generating renewed price pressures or excessive leverage. The relationship between the 1.9% July inflation rate and the 5.75% NBS policy rate is consequently becoming an increasingly important factor for companies and households assessing borrowing and investment decisions during the remainder of 2026.
