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Key Policy Rate Cut to 9%


The NBS Executive Board decided to cut the key policy rate by 0,5 percentage points to 9%.

In making its decision the Executive Board was guided by the fact that year-on-year inflation has been moving around the lower bound of the target tolerance band and that inflationary pressures have subsided significantly. Also, medium-term inflation expectations of financial and real sectors are stable and within the band.

Strong disinflationary pressures in the coming period will be generated by low aggregate demand, arising from, among other things, the credit downturn and adverse developments in the labour market. The continuing low food production costs will also have a disinflationary effect. Trends in the foreign exchange market are stable, due not only to monetary policy measures, but the low current account deficit as well.

No negative impact on the country’s risk premium and external trade has so far resulted from the Fed’s QE tapering and geopolitical tensions arising from the Ukrainian crisis.

The Executive Board's view is that the financial market has so far responded positively to the announced economic measures of the new Government, which imply a commitment to vigorous and full implementation of fiscal policy measures. This would stabilise inflation at a low level and create the room for further monetary policy easing.



Fitch Downgrades Serbia to 'B+'


The reasons for the decision are growth of the government deficit in 2014, the general situation with the debt compared to the GDP level and the lack of structural reforms that were announced earlier, Fitch Ratings said, quoted by Serbia's Ministry of Finance.

The start of the accession talks with the EU, reduction of the balance of payments current account deficit, increase in the foreign exchange reserves and start of the talks with the IMF in February this year are listed as positive aspects.

The Ministry of Finance said it recognized the need for continuity in stabilizing public finances and the macroeconomic environment.

The first steps to that end have already been taken, with the 2014 economic growth being higher than expected, the inflation in 2013 hitting a historic low and export increasing, which led to a reduction in the current account deficit.

The costs of funding the government also reached a historic minimum on the domestic market in the last quarter of 2013 and are likely to drop further.

The ministry "will continue to insist on a consistent implementation of a set of economic measures, so the plan to reduce the fiscal deficit, stabilize the public debt's share in GDP in the long term and ensure Serbia's economic growth is completed," the statement said.


The Conclusions from 12th International Belgrade Stock Exchange Conference


The results of 12th International Belgrade Stock Exchange Conference “UPGRADE IN BELGRADE 2013”, which was held on 19 November in Belgrade Hyatt hotel, exceeded the expectations of the majority of participants, to a great extent. It is expected that the participation of numerous local and international experts, capital market participants, as well as the managers of the funds managing the assets of over EUR 100 billion, who were, in direct discussions, informed on the operation of local and other listed companies in the region, will result in the implementation of new solutions and opportunities for investment on the local capital market, in the following period.

The participants of “UPGRADE IN BELGRADE 2013” Conference had an opportunity to hear the presentations and present their own positions on the topics of macroeconomic environment, potentials of the integrations of the markets in the region, pension reform outlook in Serbia, and new investment products, as well as alternatives on the local capital market, but also to, together with the top managers of the best companies from Serbia, Croatia, Slovenia, Bulgaria, Bosnia and Herzegovina, and Macedonia, participate at over 150 individual discussions within 3rd Regional Investor Conference, which was this year organised in cooperation with Wood & Company, one of the leading investment companies in Central Europe.

The third panel “New Products and Investment Alternatives” brought about a long awaited optimism to local capital participants, emphasising the opportunities of overcoming the problems of low turnovers and liquidity by creating new market material, above all, structured products, but, within the same Panel, the requirement for an additional engagement of all of the participants, regulators and financial institutions, to be engaged in the implementation of such operations, was also emphasised. In addition to the experiences in the region, the experiences of German derivative financial instrument market, which is one of the most developed in the world in this field, were presented, too.