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BELGRADE (Serbia), August 14 (SeeNews) - Serbia's central bank said on Wednesday that it expects inflation of around 2% in the country in both 2019 and 2020, as a continuation of the stable and low inflation at around that level observed in the past six years.
"Favourable macroeconomic trends have continued into 2019 – inflation is low and stable, macroeconomic and financial stability has been preserved, and the costs of financing have stayed low, feeding through into higher economic and investment activity," central bank vice-governor Zeljko Jovic said in a statement ahead of a presentation of the August 2019 inflation report of the bank.
Jovic also said that the amount of non-performing loans in Serbia's banking sector has decreased by more than 70% in the past four years to their current ratio of 5.2% of total loans.
Serbia's first-half budget surplus equivalent to 0.7% of GDP is a result of successful fiscal consolidation and full coordination of monetary and fiscal policies, the vice-governor noted.
Taking into account the monetary easing of leading central banks abroad and the positive macroeconomic trends at home, Serbia's central bank cut its key policy rate by 25 basis points in each of July and August to its current level of 2.5%, which is its lowest in the inflation targeting regime yet, Jovic added.
The central bank, NBS, has set a target band of 1.5%-4.5% for annual inflation by the end of next year.
In July, Serbia's average consumer prices rose by 1.6% year-on-year, speeding up from the 1.5% increase registered in June, according to the most recent official statistics available.
Earlier this week, Austria's Erste banking group said it also expects Serbia's average consumer prices to rise by 2% in 2019 despite the slowdown in the summer months of the year. The average annual consumer price inflation in the Balkan country slowed to 2.0% last year from 3.0% in 2017.