The Secretary General of the Association of Banks of Serbia, Vladimir Vasić, said that inflation in Serbia is expected to drop between 9 and 11 percent by the end of this year.
Commenting on the National Bank of Serbia’s projections, according to which a significant drop in inflation is expected in the second half of the year, Vasić told Tanjug news agency that that is good news and that inflation is finally expected to begin to consider how much damage it has done to ordinary people, businesses, the economy and banks.
“We expect inflation to be between nine and 11 percent by the end of the year, and to return to a normal range of 3%, plus/minus 1.5% next year,” Vasić said.
When asked if there will be a drop in consumer prices, Vasić explains that prices are dictated by customers and that it depends on their decision whether to buy a product or not.
When asked to comment on people’s declining interest in loans and whether this is the end of the era of cheap money, Vasić stated that in late 2022, for the first time, Euribor was negative and then zero and added that it would return to that level probably in 2024 when the cost of money drops.
“I’m not sure if Euribor will be negative, but I’m sure it will decrease,” he said.
He also spoke to variable interest rate, stating that it has been in use for 20 years and that people who took out mortgages and other loans benefited from it, because they paid less in instalments than they should have.
“When there is uncertainty in the market like now and you don’t know when inflation will stop completely, then there is uncertainty about what the price of money will be. When you take a loan at any time, the fixed interest rate at that moment is always higher than the variable interest rate because it contains a dose of uncertainty in the future,” explained Vasić.
(Nova.rs, 02.03.2023)