Bi-Weekly Report 10-23 July 2018


The CBRT kept its key rate -- the 1-week repo rate – unchanged at 17.75%

Lending activity (FX-adjusted) slowed significantly in H1:18, mainly on higher interest rates and fading impact of the Credit Guarantee Fund scheme

Customer deposits (FX-adjusted) decelerated in H1:18, hampered by heightening uncertainty ahead of the June 24th snap presidential and parliamentary elections



The banking sector's bottom line improved further in Q1:18, mainly due to a slowdown in provisioning



Bulgaria closer to joining the eurozone

Headline inflation rose to a 5½-year high of 3.2% y-o-y in June from 2.8% at end-2017, mainly due stronger demand-side pressures



The IMF Executive Board approved a 30-month (non-financing) Policy Coordination Instrument for Serbia

Headline inflation declined to 2.3% y-o-y in June from 3.0% in December -- within the NBS' target range (of 3±1.5%)



Headline inflation eased to 1.4% y-o-y in June from a 5-year high of 2.4% at end-2017

Credit to the private sector continued on its recovery in H1:18 (up 6.0% y-o-y)

Customer deposit growth reached a 3½-year high of 9.2% y-o-y at end-H1:18, up from 4.6% at end-2017



Headline inflation rose to a 5½-year high of 2.4% y-o-y in June from 1.8% in December -- yet remaining well below the BoA's target (of 3.0%) for almost seven successive years

The BoA is set to initiate a new cycle of monetary policy tightening in Q2:19



The European Commission fourth Post-Programme Surveillance mission stressed the need for continued fiscal discipline and enhanced reform momentum to reduce increasing downside risks to the "very positive macroeconomic outlook"



The IMF Executive Board completed the 3rd review of Egypt's economic reform programme -- supported by a 3-year USD 12bn Extended Fund Facility

Headline inflation reversed its downward trend for the first time in 11 months in June, due to the implementation of a new series of subsidy cuts (through price increases)


Appendix: Financial Markets

Bi-Weekly Report 10-23 July 2018