Photo: Pixabay / StevepbThe European Central Bank could raise interest rates again today, which would affect the cost of borrowing in Serbia
European Central Bank (ECB) today (September 10) will most likely increase the reference interest rate by 0,25 percent, predicts the LSEG agency. Such a decision could affect the prices of loans in Sbia.
Loans prices in the country have already gone up once this year. Should citizens expect a new price increase?
Due to the political uncertainty in the world, caused by the war between the United States of America and Iran, as well as the one in Ukraine, assessments of the direction of the monetary policy of the ECB are unsatisfactory.
However, some data are clear. Inflation in the Eurozone accelerated to 3,3 percent in August, while energy price inflation reached 14,3 percent.
Eurozone, an energy importer, has seen inflation above the ECB's two percent target since the war in the Middle East threatened shipping through the Strait of Hormuz and sent oil prices soaring.
With this in mind, a scenario where the ECB raises interest rates at its September meeting is quite realistic.
The ECB implemented the first increase, after a break that lasted from 2023, in June. Since then, the main refinancing rate has been at 2,40 percent, while the marginal credit facility interest rate has been kept at 2,65 percent.
Almost all types of loans have risen in price this year in Serbia. Despite this, during the second quarter, an increased growth in credit activity was recorded - citizens borrowed more.
In the period from March to July, it was more expensive for the economy to borrow on the basis of all loans in euros, while only investment loans became cheaper with dinar loans. When it comes to the household sector, only housing loans in dinars and cash loans in euros have become cheaper.
"Loans have generally become more expensive due to the external situation," broker Nenad Gujaniฤiฤ told Vreme. "The war in the Middle East and the increase in oil prices forced the European Central Bank to increase interest rates, and this also affected the domestic market. There is a tendency for even higher credit prices."
Executive Board National Bank of Serbia (NBS) decided today (September 10) to keep the reference interest rate at the level of 5,75 percent, as well as not to change the interest rates on deposit and credit facilities, which remain at 4,5 and seven percent.
According to the NBS, year-on-year inflation continued to move within the target range (of three plus or minus 1,5 percent), and since June it has again been below the central value of the target. In July, it was 1,9 percent.
The NBS's August projection predicts that inflation this year will be lower than projected three months ago, and that it will remain within the target range throughout the projection horizon, i.e. in the next two years.
The central bank announced that when making the decision, they took into account the realized and expected trend of inflation in the following period, as well as risks from the international environment that may affect its trend.
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