Jorgovanka Tabaković: Brave old world

What the desk is arguing

The desk posits that the National Bank of Serbia's recent communications indicate a strategic pivot towards maintaining economic stability, particularly in light of persistent inflationary pressures. Governor Tabaković emphasized the need for a balanced approach to monetary policy, which aligns with the central bank's inflation target of 3% and reflects a commitment to sustainable economic growth.

Supporting this view, Serbia's inflation rate remains elevated at 8.5%, prompting the central bank to consider further tightening measures if inflation does not show signs of abating. This context suggests that the dinar may appreciate against major currencies, particularly if the central bank's actions lead to a more favorable inflation outlook.

Where it sits in our coverage

Our consensus target for the Serbian dinar against the euro is 1.075, with a range of 1.04 to 1.12. Notable firms include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

This view aligns with jpmorgan, which supports a stronger dinar outlook, while bofa takes a more cautious stance at the lower end of the range. The desk's call is positioned at the upper bound of the consensus spread, indicating a more optimistic outlook compared to some peers.

How other firms see it

Firms such as jpmorgan and deutschebank express a bullish sentiment towards the dinar, anticipating further strengthening as inflationary pressures ease. Conversely, bofa and citi adopt a more bearish perspective, citing concerns over external economic shocks and domestic challenges.

Key indicators to monitor include the EUR/USD trajectory, which may reflect broader market sentiment influenced by the ECB's policy decisions, and Serbia's inflation data, which will be critical in shaping the central bank's future actions.

What the calendar says

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