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BELGRADE, March 2 (Reuters) - Serbia's central bank left its key policy rate on hold at 16.5 percent on Monday, in line with market expectations, only days after the official statistics published data showing the economy weakening.
"At the time of strong price pressures, fuelled by strong inflationary expectations, a further relaxation of the monetary policy restrictiveness is impossible," the bank's monetary board said in a statement after its rate-setting meeting.
Eighteen out of 20 analysts and currency dealers in the Reuters poll late last month expected rates to remain unchanged.
The list of central bank's concerns also included fiscal expansion at the end of 2008, uncertain foreign capital inflows due to the global credit crunch and unclear fiscal policy choices in 2009.
Retail prices rose to 10.7 percent in February, from 6.8 percent at the end of December, fuelled by higher regulated prices.
"In the first two months of the year, regulated prices rose by almost 9 percent," the central bank said, adding that such an increase could make it difficult to keep the increase in regulated prices in an 11-15 percent range this year.
Data last week showed retail price inflation climbed to 10.7 percent year-on-year in February but industrial output plunged 17.1 percent on the year in January.
The bank last cut its two-week repo rate