Reduced inflation expectations due to pandemic crisis

Based on data collected in October 2020, the Central Bank of Bosnia and Herzegovina (CBBH) announced the inflation projection to be 0.27 %, for the current 2020, which has been significantly lower than previously stated projections. The reason for this is the general slowdown in economic activity and demand, which is directly reflected in the very slight expected rise in prices.

For 2021, inflation is projected to be 1 %, which indicates that no significant inflationary pressures are expected. The current monetary policy arrangement has largely enabled low inflation to be maintained, which is one of the preconditions for sustainable economic growth.

Research on inflation projections is important for monitoring economic developments. It is common practice for central banks to monitor inflation projections, in order to be able to intervene and maintain stable inflation.

On the recommendation of the European Commission, the CBBH started the semi-annual research of inflation projections. Data collection and analysis primarily refers to the inflation forecasts of financial sector experts in BH for the current and next year.

In cooperation with banks and insurance companies, the CBBH will continue to regularly conduct these surveys and publish the results in order to transparently communicate with the public and preserve the credibility of monetary policy.