eng 2018 Abstract: It has been almost ten years since inflation targeting was introduced in Serbia as a monetary policy regime after a long period of high inflation, economic stagnation, high unemployment and structural underdevelopment. Under such conditions, there is no certainty of the success of any single monetary policy regime. There is no full agreement and clear evidence of the pronounced benefits of the monetary regime of targeted inflation against the rest, but this regime provides an additional incentive for the analysis and understanding of the transmission mechanism. The unstable and turbulent environment, as well as the internal problems of the countries in transition, put even more restrictions and challenges on the monetary policy makers in terms of the operation of the selected monetary policy instruments. On the one hand, for the successful realisation of economic objectives (inflation rate, unemployment rate, economic growth and development), a consistent monetary policy is needed, given the time lag of the effects of monetary measures; on the other hand, it is necessary to adapt to the changed requirements and market conditions. Especially in countries in transition, the action lag is emphasised, which is significantly shorter in the developed countries. Monetary policy is at center stage in discussions about how to promote sustainable growth and low inflation. Due to the large budget deficits of most developing countries, and due to suspicion of the ability of fiscal policy to achieve the desired stabilization results, the consensus of economists and politicians about the primary role of monetary policy in stabilizing production and inflation has been achieved. The paper will analyse the effects of the chosen monetary policy regime in Serbia, whose understanding requires a good knowledge of the transmission mechanism, through analysis of the level of inflation, unemployment, exchange rate variability, interest rate movements after the introduction of the targeted inflation regime in private and public sector. Although the effects of the monetary policy on real economic trends depend on the effects of other economic policies, primarily fiscal policy, the analysis will focus on the successful realisation of the defined inflationary target. The paper will present the basic theoretical settings of the target inflation regime, the transmission channels of monetary policy and the contribution and relevance on real sector in Serbia. info:eu-repo/semantics/conferenceProceedings application/pdf 1504923 bytes Keywords: Monetary policy, Inflation targeting, Transmission mechanism, Key policy rate All rights reserved Transmission mechanism of monetary policy in Serbia – Support for the private and public sector? https://phaidrabg.bg.ac.rs/o:29238 Contemporary Issues in Economics, Business and Management, EBM, Faculty of Economics University of Kragujevac, Kragujevac Šabotić, Zenaida Kahrović, Ernad