inflationary pressures are low and macroeconomic fundamentals continue to improve, we have decided to keep the key policy rate unchanged at 4. 25 % for the time being because of persistent uncertainties in the international commodity and financial markets. on the other hand, movements in the domestic market – most notably the continuing and significant narrowing of internal and external imbalances, are cushioning the effects of external risks. what is certain in this time of uncertainties seeping in from the international environment is that the national bank of serbia shall, as so far, rise to all the challenges and that serbia will record higher and sustainable economic growth rates led by export - oriented investment. the improved macroeconomic indicators and a brighter outlook for the period ahead have also been recognised and acknowledged by the european commission, which revised up the economic growth projection for serbia, and by rating agencies, which raised serbia ’ s credit rating outlook. i now give the floor to ana ivkovic who will present to you in more detail our view of serbia ’ s macroeconomic prospects in the period ahead. thank you for your attention. bis central bankers ’ speeches

see some evidence that people are borrowing from other sources to put together enough of a down payment to avoid the insurance requirement. this could be a concern, depending on the source of the borrowing. imbalances in housing markets, the second vulnerability, have also grown since december. policies aimed at cooling the greater vancouver area market appear to have had only a temporary effect, as sales and prices are rising again. similar policies have recently been implemented for the greater toronto area ( gta ). while the most recent average home sale price in the gta has declined, that followed significant price acceleration over the previous year, across dwelling types. there is a map in the fsr showing that large price increases are now being seen across the region, from niagara to peterborough. 1 / 2 bis central bankers'speeches we expect macroprudential and housing policy measures to help mitigate this vulnerability over time. and i would point out that housing market fundamentals remain very strong in the greater toronto and vancouver areas, with solid growth in population and employment. however, fundamentals alone cannot explain the price movements we have seen, and there is evidence that extrapolative expectations continue to play an important role. this is important because there is a greater chance of a correction when prices rise at a faster pace than fundamentals would imply. and where extrapolative expectations are at work, there is always a risk that expectations can turn quickly, amplifying the drop in prices. so, given the evolution of these two vulnerabilities, the bank looked at the most important risk scenarios for the canadian economy. specifically, we once again looked at a risk scenario where a severe recession triggers a correction in house prices. and we took a narrower look at a different risk scenario, where a house price correction in specific regional markets occurs on its own, rather than being caused by some external shock. under the first scenario, a severe recession would lead to widespread job losses and declining income, which would hurt highly indebted households in particular. the ensuing house price correction would worsen the impact of the recession, which could lead to widespread stress in the financial system and economy. the canadian economy has been strengthening in recent months, so the chance of this scenario happening is decreasing. however, its impact could now be more severe because the underlying vulnerabilities have grown. the second scenario we looked at involved a significant house price correction in the greater toronto and vancouver areas. such a correction would hit the british columbia and ontario