Contrary to expectations, Serbia’s central bank increased rates by 25 bps to 6.50%. This hike came as a surprise because inflation had recently been slowing. However, officials argued that the increase was necessary to maintain inflation on a sustainable downward trajectory. Inflation declined to 13.7% and is projected to return to single digits by year-end Core inflation is currently around 10%, the lowest since December 2022. Officials are also exerting efforts to combat the appreciation pressure on the Serbian dinar, striving to maintain the currency within a tight range relative to the EUR.