BELGRADE (Reuters) - Serbia's central bank is likely to hold its benchmark interest rate unchanged on Thursday, with uncertainty about whether the Federal Reserve will soon raise borrowing costs outweighing any concerns about low inflation, a Reuters poll showed.
Last month, the central bank in Belgrade left the rate <RSCBIR=ECI>, <RSDREPO=> unchanged at 4 percent as it awaited fresh signals on U.S. monetary policy following Donald Trump's unexpected presidential election victory.
All 13 analysts and traders polled by Reuters this week and last said the Serbian bank would again keep the rate at 4 percent on Thursday.
The Fed meets next week, and any U.S. rate hike would tend to weaken investor demand for Serbian and other emerging market assets.
Serbian inflation has remained low throughout 2016, and in October stood at just 1.5 percent - the bottom of the bank's target range. The Statistics Office is scheduled to release November inflation data on Dec 12.
The bank, which cut benchmark rates by 25 basis points in July, has reduced its inflation target band for 2017 to between 1.5 and 4.5 percent from 2.5 to 5.5 percent.
"The bank is keeping an eye on the U.S. Fed and it is unlikely to change rate the due to uncertainty over a rate hike next week," a trader said.
In an analyst note, Erste Group said it saw potential for another Serbian rate cut soon given a lowering of the fiscal deficit, a positive International Monetary Fund review of the economy and a stable dinar currency.
"The timing and path of future Fed's monetary policy stance are already largely priced in with no stronger repercussions on Serbian economy," it said.
Serbia's economy has picked up this year after the government introduced structural reforms under a 1.2 billion-euro ($1.29 billion) loan agreement with the International Monetary Fund.
Last month, the IMF said it expected Serbia's economy to grow 3 percent next year and its budget deficit to narrow further. It also said public-sector reforms must continue to secure strong medium-term growth.
Serbia's currency, the dinar (EURRSD=), has remained relatively stable, shedding 0.13 percent since the last rate-setting meeting on Nov 10.