Macroeconomic Forecast Bosnia

Bosnia's consumer price index increased by 4.2% in May compared to the same period a year earlier, marking a marginal uptick from the 4.0% reading from April. We continue to assert that the gradual improvement in demand conditions, coupled with Bosnia's pegged exchange rate, which is importing loose monetary policy from the eurozone, will fuel inflationary pressures. We have revised up our 2011 forecast, now projecting consumer price inflation to average 4.0% from a previous target of 3.1%. Beyond this year we expect inflation to stabilise around 4.0% over the medium term.

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