The Central Bank of Bosnia and Herzegovina monitors with particular attention all existing risks that may lead to higher inflation than expected, said CBBH Vice Governor Marko Vidaković, stressing that the global economic situation, as well as geopolitical risks, still require adjustment of investment policies.
Vidaković participated in the spring meeting of Central Banking, held in Cape Town, where, speaking about Bosnia and Herzegovina, he emphasized the dependence of the domestic economy on the international environment, especially emphasizing the importance of developments in the European Union and the Eurozone.
He warned about inflationary pressures that were above the multi-year average last year in Bosnia and Herzegovina, and the need for long-term efforts to stabilize inflation.
According to the latest projections of the CBBH, it is estimated that the total inflation for the first quarter of 2024 will amount to 2.0, and the base inflation to 4.4 percent.
Vidaković emphasized that in 2023 the Central Bank of Bosnia and Herzegovina achieved the most successful financial result since the establishment of the bank, which is a consequence of the increase in interest rates and the yield of securities in euros, but most importantly, the timely restructuring of the portfolio of foreign exchange reserves that was undertaken in 2022 and continued in the following year.
He highlighted the key perspectives and challenges that the global and domestic economy are currently facing, primarily in the context of monetary policy.
Vidaković stated that a number of investment decisions were taken at the strategic and tactical level, and the restructuring of the portfolio of foreign exchange reserves was carried out, including a significant shortening of the average modified duration of the total portfolio of foreign exchange reserves.
As he pointed out, the CBBH remains consistent with its investment policy in accordance with legally defined goals and objectives, which implies that the official foreign exchange reserves are managed in a safe and profitable manner.
Vice-governor Vidaković emphasized that, thanks to the restrictive monetary policy of the leading central banks, significant progress has been made in reducing inflation, and that inflation is receding faster than expected, approaching pre-pandemic levels, while recession in major world economies has largely been avoided.
Speaking about future trends, Vidaković stated that a change is expected in the monetary policy cycle of the leading central banks, with an emphasis on the gradual loosening of policy, with the belief that inflation has been largely defeated.
