<abstract xmlns="http://www.w3.org/1999/xhtml"><p>In achieving price stability as the primary objective of monetary policy, the National Bank of Serbia uses the key policy rate as the main instrument of monetary policy, while other instruments have a supporting role - contribute to a smooth transmission of the key policy rate on the market, as well as the development of financial markets. However, because the conditions in which economic and financial system of the Republic of Serbia works, transmission mechanism of monetary policy is conducted mainly through the exchange rate channel, while the channel of interest rates almost did not work. The great impact the exchange rate channel is determined by the great influence of the single currency euro and the ECB on our country. Therefore, the aim of this paper is to analyse the efficiency of the key policy rate as a monetary policy instrument, because in recent years the primary instrument receives a secondary character in the monetary regulation.</p></abstract>

In achieving price stability as the primary objective of monetary policy, the National Bank of Serbia uses the key policy rate as the main instrument of monetary policy, while other instruments have a supporting role - contribute to a smooth transmission of the key policy rate on the market, as well as the development of financial markets. However, because the conditions in which economic and financial system of the Republic of Serbia works, transmission mechanism of monetary policy is conducted mainly through the exchange rate channel, while the channel of interest rates almost did not work. The great impact the exchange rate channel is determined by the great influence of the single currency euro and the ECB on our country. Therefore, the aim of this paper is to analyse the efficiency of the key policy rate as a monetary policy instrument, because in recent years the primary instrument receives a secondary character in the monetary regulation.

Key Policy Rate as the Main or Additional Instrument of Inflation Targeting Strategy in Serbia

Economic Themes

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

In achieving price stability as the primary objective of monetary policy, the National Bank of Serbia uses the key policy rate as the main instrument of...

Key Policy Rate as the Main or Additional Instrument of Inflation Targeting Strategy in Serbia

Published Online: Jul 18, 2017

Page range: 143 - 159

Received: Jul 15, 2016

Accepted: May 05, 2017

DOI: https://doi.org/10.1515/ethemes-2017-0009

© 2017

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.