Regardless of witnessing rising inflation for several quarters, central banks regulating main financial markets are reluctant to increase their interest rates. Though some tightening of the monetary policy is already happening, the inflation itself is not perceived as a long-term threat. Belated supply recovery coming after Covid hit is named as the main reason behind the existing disbalance.

The interrupted supply chains were simply unable to follow the speed of the demand recovery that reached pre-crisis level relatively quickly. Central banks are expecting balance to be regained by mid next year which will naturally bring inflation to targeted levels.

The policy allows for continued cheap financing of the economy at low interest rates to accelerate recovery. The National Bank of Serbia is no exception to this rule, despite of relatively high inflation rate reaching 5.7% in September, it does not plan to increase its reference rate.