, amounting to 3. 7 % of gdp the budget deficit was almost halved last year, while the current account deficit was cut by one fifth and was fully covered by foreign direct investment. in addition, the public often debates whether the noticeable fall in bank lending rates and the cost of government borrowing is attributable more to the monetary easing of the national bank of serbia or the european central bank. i will give you nothing but facts. the fall in dinar lending rates began in september 2013, after the national bank of serbia initiated a cycle of key policy rate cuts in may that is also their lowest level on record. and these are the facts. lower interest rates also reflect competition among banks which increased, inter alia, as the national bank of serbia made sure that citizens have access to transparent information on lending terms offered by different banks. during the same period, though lesser than that for dinar loans, a decline was recorded for interest rates on euro loans ( by 2. 8 pp, to 4. 4 % in december ), which is by all means due to the european central bank ’ s monetary accommodation and the consequent fall in euribor. there is no doubt however that this is also a result of serbia ’ s better macroeconomic performances and lower risk premium, and hence lower cost of borrowing for both government and private sector. bis central bankers ’ speeches after cutting the key policy rate in its february meeting, the executive board particularly underlined the expectation that further monetary policy easing will be followed by a further recovery of lending activity, which will contribute to investment. the 1. 8 % credit growth in 2015, in the face of maturing of rsd 110 bln worth of subsidized loans, was beyond our expectations. new investment loans were 2. 5 times higher than in 2014, while a significant rise was recorded also for loans that were refinanced under much more favourable terms. we expect positive tendencies in the credit market to continue in 2016. ladies and gentlemen, dear guests, what is certain, despite numerous uncertainties in the international environment, is that we will maintain monetary and financial stability and thus, give a full contribution to sustainable economic recovery and prosperity of our country. i now give the floor to ana ivkovid to present the key messages from the february inflation report. bis central bankers ’ speeches

ben broadbent : the monetary policy committee ’ s forecasts and the yield curve – predictions versus promises speech by mr ben broadbent, deputy governor for monetary policy of the bank of england, at reuters, london, 18 november 2015. * * * i would like to thank clare macallan for research assistance and i am grateful for helpful comments from other colleagues. the views expressed are my own and do not necessarily reflect those of the bank of england or other members of the monetary policy committee. good morning! the previous governor of the bank, mervyn king, once referred to what he called the “ rich seam ” of mpc communication. rich or not, it ’ s certainly a wide seam : mpc members each give several speeches a year ; we publish minutes of every meeting, now supplemented with a monetary policy summary ; every quarter we publish a 50 - page inflation report that summarises the mpc ’ s collective view of the economic outlook and includes our latest forecasts ; every report is followed by a session in front of parliament ’ s treasury committee. yet, from all this, the outside world seems increasingly interested in only one particular nugget : the mpc ’ s central inflation forecast two years ahead. this forecast is derived assuming that interest rates follow the path priced into financial markets. comparing the two, commentators often make very precise inferences from the mpc ’ s projections about future policy. when it ’ s above the 2 % target, our two - year forecast is said to indicate that interest rates will rise faster than the market expects ; a sub - 2 % forecast is said to mean the opposite. recently, given the intense focus on the prospective date of the next rate change, this simple inference has been refined even further : as long as the forecast is close to 2 %, this must mean the mpc is “ endorsing ” not just the general shape of the market path of interest rates but the particular “ lift - off ” point it seems to imply. broad inferences of this sort may well be reasonable. but you shouldn ’ t push them too far. this morning i want to explain why. the most important problem is that, even if a particular path of interest rates results uniquely in only one central inflation forecast, given all our other assumptions, the opposite does not hold true : you can get to the same two - year forecast with lots of other paths as well. that ’ s because changes in interest rates have at least some impact