NBS chief expects drop in inflation, interest rates

A drop in inflation and key policy rate in 2012 will contribute to further decrease in interest rates, National Bank of Serbia (NBS) Governor Dejan Soskic says. According to him, this will positively affect economic activity and employment. NBS chief expects drop in inflation, interest rates “In March 2012 at the latest, inflation will be within targeted 4.5 plus-minus 1.5 percent, whereas the economic growth rate is expected to reduce from this year's two to 1.5 percent in 2012, and should remain at that level,” he said at a conference dubbed “Serbia's economy in the second wave of the crisis - the 2012 forecast,” held at the Faculty of Economics in Belgrade on Saturday. The NBS governor recalled that, in accordance with NBS' projections, the year-on-year inflation continued to drop and had been reduced by 6.6 percent to 8.1 percent from April to November 2011. He expects inflation will continue to drop in 2012, primarily due to the reduced pressures on the rise in food prices, low aggregate demand, slow growth in regulated prices, as well as continued lowering of inflationary expectations. Soskic pointed out that NBS would continue with activities aimed at encouraging dinarization in the domestic financial system, pointing out that this was particularly important in a situation of uncertainty regarding the fluctuation of foreign currencies at the time of global financial crisis. Dejan Soskic (Tanjug, file)

NBS chief expects drop in inflation, interest rates

“In March 2012 at the latest, inflation will be within targeted 4.5 plus-minus 1.5 percent, whereas the economic growth rate is expected to reduce from this year's two to 1.5 percent in 2012, and should remain at that level,” he said at a conference dubbed “Serbia's economy in the second wave of the crisis - the 2012 forecast,” held at the Faculty of Economics in Belgrade on Saturday.

The NBS governor recalled that, in accordance with NBS' projections, the year-on-year inflation continued to drop and had been reduced by 6.6 percent to 8.1 percent from April to November 2011.

He expects inflation will continue to drop in 2012, primarily due to the reduced pressures on the rise in food prices, low aggregate demand, slow growth in regulated prices, as well as continued lowering of inflationary expectations.

Šoškić pointed out that NBS would continue with activities aimed at encouraging dinarization in the domestic financial system, pointing out that this was particularly important in a situation of uncertainty regarding the fluctuation of foreign currencies at the time of global financial crisis.