midpoint. though higher than early in the year, inflation in serbia is lower than in the majority of countries of the region running the same monetary policy regime. this is primarily owed to the preserved exchange rate stability and anchored inflation expectations of the financial and corporate sectors. chart 7 cpi movements in selected cesee countries in the previous year ( y - o - y rates, in % ) 5, 0 5, 0 4, 6 3, 8 3, 5 3, 4 3, 0 3, 3 3, 5 1, 9 hungary romania 8 10 8 10 inflation target poland czech republic 8 10 tolerance band 8 10 inflation serbia 8 10 core inflation sources : central banks of selected countries. after reaching 3. 6 % in may, partly also due to the low base effect from may last year, y - o - y inflation slowed down over the following two months, consistent with nbs expectations, and measured 3. 3 %. chart 8 inflation projection ( y - o - y rates, in % ) - 1 - 2 source : nbs. certain deviations from our expectations have been recorded only in unprocessed food prices, which have been higher than seasonally expected over the past few months. the absence of higher inflationary pressures on the demand side, i. e. our estimate that inflation is driven by temporary factors, is also confirmed by the core inflation which has continued to move around 2 % over the last few months. тhis indicates that in serbia, unlike in some other countries of the region, no significant pressures are stemming from domestic factors. speaking of inflation in serbia going forward, according to our projection, y - o - y inflation will remain within the bounds of the national bank of serbia ’ s target ( 3±1. 5 % ) throughout the whole projection horizon, moving in the upper half of the target band most probably until the end of the current year and in the first quarter of the next year. its decline is expected as of the second quarter of 2022, so that from the second half of next year, until the end of the projection horizon, inflation should again move in the lower part of the band, i. e. from 1. 5 % to 3 %. by estimating the current higher inflation as temporary and taking into account the fact that inflation projection over the monetary policy horizon, i. e. one - year ahead, is below the target midpoint, the nbs, unlike some central banks in the region, did not

commodity markets, and to assess their impact on economic developments in serbia. in the coming period too monetary policy will be predictable and consistent in delivering low and stable inflation in the medium term, which, along with preserved financial stability, will contribute to sustainable economic growth and stronger resilience to external uncertainties. i would like to use this opportunity to underscore that it was the strong economic growth and the results of the national bank of serbia in terms of maintaining price and financial stability that were cited as the reasons behind standard & poor ’ s decision to upgrade serbia ’ s outlook from stable to positive in late 2018. at the end of my address, i would like to say that low and predictable inflation and a stable financial system, the achieved economic growth rates, balanced public finances and the established downward trajectory of public and external debt testify to our commitment and readiness to respond timely and adequately to volatile external conditions. allow me to conclude that this is an environment conducive to further growth in investment and competitiveness, and hence, further rise in living standards on sustainable grounds. унутрашња употреба having said this, i give the floor to my colleagues from the economic research and statistics department to give you a more detailed analysis of current developments and to present our new macroeconomic projections.