u. s. proposals for basel ii implementation, the agencies did not think it would be appropriate to replace the existing basel i capital rules for small, noncomplex banks in this country with the basel ii standardized rules. the agencies concluded, based in significant part on input from small community banking organizations, that the implementation costs of such an overhaul generally would exceed its regulatory benefit. instead, the agencies intend to propose, through a notice of proposed rulemaking, a simpler, more modest set of revisions to our existing basel i - based capital rules for smaller u. s. banks - revisions known as basel ia. basel ia as noted, we anticipate that only one to two dozen institutions would move to the u. s. version of basel ii in the near term, meaning that the vast majority of u. s. institutions would continue to operate under basel i - based rules. the u. s. basel i framework has already been amended more than twenty - five times since its introduction, in response to changes in banking products and the financial services marketplace. in october 2005, the agencies issued an anpr for basel ia, which discussed possible changes to increase the risk sensitivity of the u. s. basel i rules and to mitigate competitive distortions that might be created by introducing basel ii. we have reviewed comments on the anpr and are working on a notice of proposed rulemaking, which we hope to have out very soon. in drafting all of these regulatory capital proposals, we continue to consider the balance between risk sensitivity and regulatory burden, since more risk - sensitive capital requirements generally imply greater burden. thus, we are mindful that amendments to the basel i rules should not be too complex or too burdensome for the large number of small - and mid - sized institutions to which the revised rules might apply. indeed, a number of those commenting on the anpr advocated leaving existing rules unchanged. as noted, the agencies are taking into account potential competitive effects that basel ii might create between those institutions that would adopt basel ii and those that would not. indeed, we recognize that many of the thousands of depository institutions that would remain under the current capital rules may be concerned about the potential uncertainty surrounding basel ii. as part of our efforts to analyze and address these concerns, the federal reserve published a series of research papers focused on potential competitive effects in areas such as small business lending, mergers and acquisitions, and residential mortgage markets. the agencies have been taking into account the issues raised in those papers

of this year, inflation is expected to slow down and move closer to the lower bound of the target tolerance band. in an environment of low inflationary pressures, this will also be supported by the drop - out of last year ’ s one - off price hikes of certain products and services from the year - on - year calculation. in the medium - term, according to our new central projection, year - on - year inflation will continue to move within the target tolerance band of 3. 0±1. 5 % until the end of the projection horizon, that is in the following two years, which will also be supported by the gradual recovery of domestic demand. * * * taking into account primarily the expected movement of inflation and its key factors in the period ahead, as well as the effects of past monetary policy easing in the period since the last inflation report, we kept the key policy rate at 3. 5 %. in the coming period as well, monetary policy decisions will depend on our estimate of the impact of domestic factors and factors from the international environment on inflation movements in serbia. in our judgement, the major risks come from the international environment, and thus we will continue to closely monitor and analyse movements in the international financial market and the market of primary commodities, and to assess their impact on economic movements in serbia. chart 14 inflation projection ( y - o - y rates, in % ) - 1 - 2 source : nbs. of course, same as before, the national bank of serbia will use all available instruments in order to keep inflation in serbia low and stable in the medium term. i believe that this, together with preserving financial stability, is the best way for a central bank to contribute to sustainable economic growth and to strengthen resilience to challenges from the environment. i will finish my introductory address with these words and give the floor to my colleagues from the directorate for economic research and statistics, who will briefly present the latest projections and text boxes from the report. what you will also hear from them is that our projections of inflation movements indicate that in the coming period we will continue to fulfil our primary legal mandate of keeping inflation within the target, while well - calibrated measures of economic policy set the groundwork for sustainable acceleration of gdp growth, which we estimate at around 3. 5 % in 2018 and 2019, and at around 4 % in the medium term.