RS Interest Rate Decision: Stability Amid Persistent Challenges – November 2025 Analysis
The National Bank of RS maintained its benchmark interest rate at 5.75% in the November 13, 2025 decision, marking the tenth consecutive month without change. This steady stance reflects a cautious approach amid mixed macroeconomic signals. Inflation pressures remain contained but external risks and fiscal constraints temper optimism. This report leverages the latest data from the Sigmanomics database, comparing historical trends and assessing implications for monetary policy, financial markets, and the broader economy.
Table of Contents
The RS central bank’s decision to hold the interest rate steady at 5.75% aligns with a broader strategy to balance inflation control and growth support. Since February 2025, the rate has remained unchanged, reflecting persistent caution amid global uncertainties and domestic fiscal pressures. The decision comes as inflation hovers near the 3% target, unemployment remains stable at 7.20%, and GDP growth moderates to 2.10% year-on-year.
Drivers this month
- Inflation steady at 3.10% YoY, close to the 12-month average of 3.00%
- Moderate GDP growth of 2.10% YoY, slightly below the 2.30% average for 2025
- Stable unemployment rate at 7.20%, unchanged from last month
- External pressures from regional geopolitical tensions persist
- Fiscal deficit remains elevated at 4.50% of GDP, limiting policy flexibility
Policy pulse
The maintained rate of 5.75% sits just above the neutral real rate estimate of 5.50%, signaling a mildly restrictive stance aimed at anchoring inflation expectations without stifling growth. The central bank’s inflation target remains 3%, with recent prints showing minor deviations but no sustained overshoot.
Market lens
Immediate reaction: The RSD currency appreciated 0.30% against the EUR within the first hour post-announcement, reflecting market approval of policy continuity. Short-term government bond yields remained flat, while 2-year yields edged down 5 basis points, signaling modest easing in market rate expectations.
Core macroeconomic indicators provide context for the interest rate decision. Inflation, GDP growth, labor market conditions, and fiscal health collectively shape monetary policy calibration.
Inflation and growth
Consumer Price Index (CPI) inflation stood at 3.10% YoY in October 2025, stable compared to 3.00% in September and close to the 12-month average of 3.00%. Core inflation, excluding volatile food and energy, held steady at 2.80%. GDP growth slowed slightly to 2.10% YoY from 2.30% in Q2 2025, reflecting softer domestic demand and external headwinds.
Labor market and fiscal policy
The unemployment rate remained at 7.20%, consistent with the previous month and slightly below the 7.40% average for 2024. Wage growth moderated to 4.00% YoY, supporting stable consumption patterns. Fiscal policy remains constrained, with the government budget deficit at 4.50% of GDP, above the 3.80% average over the past three years. Public debt stands at 55% of GDP, limiting expansionary fiscal options.
External environment
Geopolitical tensions in the region continue to pose risks to trade and investment. Commodity prices have stabilized after a volatile first half of 2025, easing inflationary pressures. The current account deficit narrowed slightly to 1.80% of GDP, supported by stronger exports in machinery and agriculture.
Financial market indicators reflect this calm. The 2-year government bond yield decreased slightly to 6.10%, down from 6.15% last month and below the 6.30% average over the past year. The RSD exchange rate against the EUR strengthened by 0.30%, reversing a mild depreciation trend seen in Q3 2025.
This chart underscores a period of policy stability amid moderating inflation and growth. The central bank’s consistent rate signals confidence in containing inflation without derailing economic momentum. Market yields and currency movements suggest expectations of continued steady policy in the near term.
Market lens
Immediate reaction: EUR/RSD declined 0.30% post-decision, reflecting market relief at no surprise hike. The 2-year yield’s 5 basis point drop indicates easing rate hike expectations, while short-term breakeven inflation rates held steady at 3.00%.
Looking ahead, the RS economy faces a mix of opportunities and risks. The central bank’s steady rate policy suggests a wait-and-see approach amid evolving global and domestic conditions.
Bullish scenario (30% probability)
- Inflation continues to ease below 3%, allowing gradual rate cuts in H1 2026
- GDP growth accelerates to 3.00% supported by stronger exports and investment
- Fiscal consolidation improves, reducing deficit below 3% of GDP
Base scenario (50% probability)
- Inflation remains near target at 3%, with stable monetary policy
- GDP growth holds steady around 2.00–2.20%
- Fiscal deficit remains elevated but manageable, limiting stimulus
Bearish scenario (20% probability)
- Geopolitical shocks disrupt trade, pushing inflation above 4%
- Growth slows below 1.50%, increasing unemployment
- Fiscal pressures intensify, forcing monetary tightening
Policy pulse
The central bank is likely to maintain a cautious stance, prioritizing inflation anchoring over growth stimulus. Any future rate changes will depend heavily on inflation trajectory and external shocks.
Market lens
Market participants price in a 60% chance of rate stability through mid-2026, with volatility spikes tied to geopolitical developments. Currency and bond markets remain sensitive to inflation surprises and fiscal news.
The RS interest rate decision of November 2025 reflects a steady, data-driven approach amid a complex macroeconomic landscape. Inflation control remains the priority, supported by stable core indicators and cautious fiscal policy. External risks and structural constraints limit upside growth potential, suggesting a prolonged period of monetary policy stability.
Investors and policymakers should monitor inflation trends, geopolitical developments, and fiscal adjustments closely. The balance of risks points to a base case of continued steady rates, with potential for easing or tightening depending on evolving conditions.
Key Markets Likely to React to Interest Rate Decision
The RS interest rate decision typically influences currency, bond, and equity markets sensitive to monetary policy shifts. Key symbols to watch include:
- EURRSD – The primary currency pair reflecting RS monetary policy impact on exchange rates.
- BELEX15 – RS stock market index, sensitive to interest rate and economic outlook changes.
- USDRSD – Another key currency pair reflecting external demand and capital flows.
- BTCUSD – Crypto market often reacts to macro risk sentiment influenced by interest rates.
- NIS – Energy sector stock sensitive to fiscal and monetary policy shifts in RS.
Extras: Interest Rate vs. EURRSD Exchange Rate Since 2020
| Year | Interest Rate (%) | EURRSD (Year-End) | Correlation |
|---|---|---|---|
| 2020 | 4.50 | 117.50 | – |
| 2021 | 5.00 | 119.00 | 0.65 |
| 2022 | 5.50 | 121.30 | 0.72 |
| 2023 | 5.75 | 123.00 | 0.68 |
| 2024 | 5.75 | 122.50 | 0.60 |
| 2025 | 5.75 | 121.00 | 0.55 |
The above data shows a moderate positive correlation (around 0.60) between RS interest rates and the EURRSD exchange rate, indicating that rate stability tends to support a stable or appreciating currency.
FAQs
- What was the latest RS Interest Rate Decision?
- The National Bank of RS held the interest rate steady at 5.75% on November 13, 2025, maintaining the rate for the tenth consecutive month.
- How does the interest rate affect RS inflation and growth?
- The current rate aims to anchor inflation near the 3% target while supporting moderate GDP growth around 2.10%, balancing price stability and economic momentum.
- What are the main risks facing RS monetary policy?
- Key risks include geopolitical tensions disrupting trade, fiscal deficits limiting policy flexibility, and potential inflation shocks from commodity price volatility.
EURRSD – Primary currency pair reflecting RS monetary policy impact.
BELEX15 – RS stock index sensitive to interest rate changes.
USDRSD – Currency pair tracking external demand and capital flows.
BTCUSD – Crypto market influenced by macro risk sentiment.
NIS – Energy sector stock sensitive to fiscal and monetary policy.
The interest rate has held firm at 5.75% for ten months, unchanged from the previous month and consistent with the 12-month average. This stability contrasts with the 2023 period when rates fluctuated between 5.00% and 5.75% amid inflation volatility.
Inflation trends show a mild deceleration from peaks of 4.50% in early 2024 to the current 3.10%, while GDP growth has moderated from 3.00% in 2023 to 2.10% in late 2025. These dynamics justify the central bank’s steady policy stance.