Although such measures were expected and economically justified taking into account the record high inflation, the announcement of the President of the European Central Bank (ECB), Christine Lagarde that this financial institution in July could pass decision on the beginning of increase of interest rates strengthens concerns how the growth of interest rates would affect BH and its citizens.
Governor of the Central Bank of BH, Senad Softic says for “Avaz” that, despite the estimated interest rate growth by 0.5%, we should wait for the decision.
“It is important to stress that increasing inflation growth in the euro area creates additional pressure on the ECB regarding the increase of interest rates, percentage of growth and quickness of action. On daily basis, we can hear numerous statements of the ECB officials on the level of the potential increase, and July is said to be the most likely date for the beginning of the interest rate increase. In any case, we will see how things will be developing and what will be the ECB decision in July,” Softic said.
Several days ago, Governor of the CBBH attended a meeting within regular annual economic and financial dialogue between the EU, Western Balkans and Turkey, which was devoted to economic challenges in the region and measures to support recovery from economic crisis.
He said that BH institutions need to adopt urgent measures due to high growth of prices, particularly energy prices.
“There are many fiscal policy instruments in the field of moratorium on excise duties, lowering of tax rates, subsidies for the poorest groups of population, moratorium on implementation of taxes on income and profit, aimed at mitigating this global inflationary shock on the standard of citizens,” Softic said.
To check interest rates
The ECB decisions will directly impact BH citizens. According to the CBBH data, credit debt of households with commercial banks has been growing moderately, amounting to 10.5 billion BAM in March of this year.
“Citizens should act with precaution, check if their loans are based on fixed or variable interest rates and try to turn their variable rates into fixed ones,” Softic pointed out.