today ’ s forum is another proof of this. a year ago, again before the audience of a scientific conference organized by vuzf university, i expressed my purely professional dissatisfaction with the fact that we rarely hear the prudent voice of the bulgarian academia. while the world has been analyzing and discoursing for years on the causes, manifestations, and lessons learned from the global crisis, our academic community rarely expresses any views on these issues and seems to be still encapsulated in its own circle, engaged in its internal management or even day - to - day problems. therefore i am glad now to admit that in this also vuzf university is an exception. i have been following with interest the public appearances of your rector, vice rector, and other professors and academics of your university. vuzf university representatives have often bis central bankers ’ speeches come up with authoritative public comments on topical economic subjects of great public significance. today i congratulate vuzf university for outpacing “ the older ” universities of economics by organizing this timely discussion. the announced topic – “ global and regional challenges to the economy and the financial system : do we have working solutions? ” – speaks for itself and is an eloquent testimony to the importance of today ’ s forum. because external environment is of special significance for the dynamics of such an open economy as that of bulgaria. it is a known fact that the original causes of the global financial and subsequently economic crisis did not stem from our region or from europe ’ s emerging markets. still, we should in no way take comfort in the external origin of the crisis because no matter what the origins of the crisis might be, we, here in bulgaria, must deal with its consequences. this is the right place to stress that the bnb is aware of its huge responsibility for the financial stability of this country and consistently works in fulfilment of the functions and tasks assigned to it by law. in its work, the central bank collaborates with many other international and national institutions, and whenever a need arises, it steps into the role of a constructive opponent. because, as i have stressed on various occasions, it should not surprise us, nor should we show intolerance to the fact that the political institutions in the democratic countries are very sensitive especially with regard to quick achievements within the context of the electoral cycle. whereas the tasks of central banks go beyond the horizon of the next parliamentary or presidential elections. we are guided by the understanding

are expected to be only partially offset by increases in the prices of housing - related goods and services – things like construction costs, rents, property maintenance, and local authority rates – and increases in cigarette and tobacco prices. in annual terms, these large negative and positive factors have been at play for at least the past year ( figure 1 ). figure 1 : contributions to annual cpi inflation over the past year ppts 1. 5 other cigarettes & tobacco 1. 0 housing & household - related goods & services 0. 5 audio - visual & computing equipment communications 0. 0 air transport - 0. 5 other transport services ( includes acc vehicle levy ) - 1. 0 petrol total annual cpi - 1. 5 sep 2015 dec 2015 mar 2016 jun 2016 source : statistics new zealand, rbnz estimates. annual inflation is expected to return to the lower end of the target band in the december 2016 quarter, as previous petrol price declines drop out of the annual calculations and housing - related goods and services prices continue to increase strongly. stability in the cost of living maintains the purchasing power of new zealanders ’ incomes. inflation that is too high or too low has economic costs, and is of concern to the reserve bank. high inflation distorts the signals being sent from relative price movements, which results in resources in the economy being misallocated. on the other side, low inflation becomes a concern if it leads to the possibility of deflation. although we do not see any significant risk of deflation in new zealand, deflation carries important costs. deflation would likely lead to consumers and businesses significantly delaying purchases or investment, in the expectation that these will become cheaper in the future. by delaying purchases and investment on a large scale, demand in the economy as a whole is reduced. this then leads to even lower prices. deflation is particularly concerning as monetary policy eventually reaches a point where it cannot go any lower in order to stimulate the economy ( known as the effective lower bound ). a buffer above zero inflation is also needed to account for any measurement error in the price index. across inflation - targeting central banks around the world, inflation of about 2 percent per annum is generally viewed as an appropriate medium - term goal. although headline cpi inflation is expected to remain low in the near term, lowering interest rates now would do little to change these outturns. monetary policy operates with long and variable lags. accordingly, monetary policy in new zealand is focused on the medium - term outlook for inflation, as