on rational expectations to wage and price dynamics, macroeconomics, econometrics, fiscal policy, and, of course, monetary policy. he has written an impressive number of influential articles in leading journals and important books. it is impossible to summarise his research in a few sentences. therefore, i will limit myself to two topics. the first topic dates back to the second half of the 1970s, when john initiated a research strategy that would have a profound and lasting impact on our profession. it was a time when the new - classical macroeconomists were claiming that monetary policy was powerless when it came to steering the economy. this challenged both the keynesian and the monetarist views. john quickly accepted the new concept of rational expectations. however, he rejected page 2 / 4 the assumption that markets always clear, and that prices and wages are perfectly flexible. his research showed that – as a result of staggered wage contracts – monetary policy, even if anticipated, can be useful for stabilising the economy. this restored the proposition of keynesian and monetarist models that even anticipated changes in money affect the economy. the second topic i would like to highlight is a recurrent theme in john ’ s research agenda. this is his deep interest in rules for monetary policy. john ’ s research has always emphasised the importance of rule - like, systematic behaviour for monetary policy. however, by the late 1980s, many people were arguing that efficient rules would have to be very complex, and expressed severe doubts about the practicability of rules for monetary policy. so john decided it was time to write down a workable rule that was consistent with his research. the result was a simple equation to guide interest rate decisions at the fed. the equation related the policy rate to inflation and unemployment. when he presented his rule at a carnegierochester conference in november 1992, he did not regard it as a big deal. it turned out quite differently. his paper, published in 1993, has become one of the most cited works in macroeconomics. the rule became known as the taylor rule. my experience at the snb testifies the importance of the taylor rule. for us, the taylor rule derives its appeal from three features. the first is its simplicity in describing the behaviour of different central banks by estimating the policy reaction to deviations from the inflation target and to the output gap. the second is its quality as a benchmark in assessing the current stance of monetary policy with

national bank of serbia opening remarks at the presentation of the inflation report – may 2019 dr jorgovanka tabakovic, governor belgrade, 15 may 2019 ladies and gentlemen, esteemed members of the press, dear colleagues, welcome to the presentation of the may inflation report. we will give you an overview of the current macroeconomic developments, our new inflation and economic activity projections, as well as monetary policy decisions in the period since the previous report. to begin with, i would like to underline that positive economic trends have continued in 2019 – macroeconomic and financial stability have been preserved, economic, investment and external trade activities have increased, while the share of our country ’ s public debt in gdp has contracted even further. all of this has been achieved despite the adverse effects of some factors from the international environment, notably the slowdown in euro area growth. for six years in a row, inflation has been low and stable, and we expect it to remain so in the coming period as well. in accordance with our expectations, inflation has continued to move within the bounds of the target tolerance band ( 3. 0±1. 5 % ) in 2019. in april this year, consumer price growth equalled 3. 1 % y - o - y, with more than half of the increase attributable to the rise in the prices of vegetables on account of the low base and last year ’ s dampened yield in other parts of europe as well. other than that, inflationary pressures remained low on both the cost and supply sides, as attested by the core inflation of 1. 4 % in april. as announced in february, we expect inflation to slow down during the next 12 months due to the base effect from vegetable prices. we expect it to come close to the target midpoint over the medium term, which will be facilitated by growth in aggregate demand. to put it briefly, inflation will remain low and stable within the bounds of the target tolerance band until the end of the projection horizon, i. e. over the next two years. these are also the expectations of the financial and corporate sectors. anchored inflation expectations are indicative of monetary policy credibility, which contributes to greater resilience to potential negative effects of developments in the international environment. chart 1 contribution to y - o - y consumer price growth chart 2 inflation projection ( in pp ) ( y - o - y, in % ) - 2 food services energy industrial goods excluding food and energy consumer prices ( % ) targeted inflation