Macroeconomic Forecast Bosnia

The rate of consumer price inflation moderated in January to 2.7% y-o-y from 3.1% the previous month. Given the ultra loose monetary policy imported from the eurozone via Bosnia's currency board arrangement, coupled with the upside bias for global commodity and energy prices, we still believe that inflation will tick higher this year. Specifically, we forecast consumer price inflation to average 3.1% in 2011, accelerating to 4.1% the following year.

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