June 4, 2019 / 10:39 AM / 13 days ago

Serbia's central bank expected to keep key rate at 3%: Reuters poll

BELGRADE (Reuters) - The Serbian central bank is seen keeping its borrowing costs on hold at 3% this week as the dinar currency remains strong, growth stable and inflation increasing slightly, but still within target range, a Reuters poll showed on Tuesday.

Twelve out of 13 analysts and traders polled forecast the bank’s policymakers would leave the benchmark interest rate unchanged when they meet on Thursday.

The central bank kept rates unchanged in May, saying the slowdown of global economic growth and inflation is influencing the normalization of monetary policies of key players such as the U.S. Federal Reserve and the European Central Bank.

The bank last cut rates in April 2018, by 25 basis points.

The Serbian economy grew 2.5% in the first quarter of 2019. According to estimates by the International Monetary Fund, the central bank and the government, it is set to grow 3.5% this year, down from 4.4% in 2018.

The IMF last month praised Serbia’s robust economic performance and urged the Balkan country to use fiscal revenues for capital spending.

Serbia’s inflation increased to 3.1% in April, from 2.8 percent a month earlier. It is still well inside the central bank’s target of 3 percent, give or take 1.5 percentage points.

The statistics office will announce May inflation data on June 12.

The dinar remained strong against the euro in April and May and the central bank, which keeps the currency in a managed float, has this year purchased 380 million euros ($427.16 million) to stem its gains on the currency market.

Reporting by Aleksandar Vasovic,; Editing by Ed Osmond

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