ECONOMY

In Brief

Inflation seen easing to 1.4 percent in March Greek consumer inflation is seen as further easing in March to a 1.4 percent annual rate, after dropping to a 41-year low in the previous month, analysts said yesterday, citing cooling energy and food prices. The median forecast in a poll of five economists showed March should mark a continuation of the downtrend in inflation, which took the headline consumer price inflation rate down to 1.6 percent in February from a 10-year high of 4.9 percent last year. «Favorable base effects from energy prices, a higher-than-initially-expected drag on consumer prices from winter sales and the favorable impact of mild weather on food components drove consumer price inflation inflation to a new low of about 1.3 percent year-on-year in March,» Nikos Magginas, an economist at National Bank of Greece, said in an e-mailed comment. Economists expect the decline to resume in April on softer domestic demand as the economy slows and on a continued drop in imported inflation. (Reuters) Serbia’s central bank lowers interest rate BELGRADE (AFP) – Serbia’s central bank cut its key interest rate to 15 percent from 16.5 percent yesterday owing to easing inflationary pressures and an International Monetary Fund standby loan. «The slowing down of inflation in March and expected low inflation in the forthcoming period» were among the reasons for the decision, the National Bank of Serbia (NBS) said in a statement on its official website. In addition, «the announcement of a deal with the International Monetary Fund, which should contribute to keeping a macroeconomic balance, has created space for a reduction in monetary policy restriction,» the NBS said. Serbia reached an agreement with the International Monetary Fund last month for a standby loan of $4.0 billion (2.95 billion euros) aimed at boosting its crisis-hit economy in return for budget-boosting measures. The deal remains subject to approval by the board of the International Monetary Fund, which has allowed Serbia to run an increased budget deficit owing to the worse-than-expected toll of the global crisis on the Balkan country. Spreads narrow Premium investors’ demand for holding non-German eurozone government debt over the benchmark paper fell yesterday, as rising bank shares lifted equity markets and appetite for other so-called riskier assets. Some of the yield spreads tightened by as much as 10 basis points, or fell to their lowest in three months. The 10-year Irish/Bund yield spread, for example, narrowed by 9 basis points to 199 basis points, the first time that spread has been below 200 basis points since mid-January, Reuters charts showed. (Reuters) Currencies strengthen Emerging market currencies will strengthen against the US dollar as investors seek higher-yielding assets on signs the global economy is stabilizing, said Citigroup Inc, the world’s fourth-biggest currency trader. South Korea’s won, India’s rupee, Brazil’s real and the Mexican peso will appreciate against the dollar, Citigroup strategists Michael Hart and Todd Elmer wrote in a research note yesterday. Turkey’s lira, the Polish zloty, South Africa’s rand and the Taiwan dollar will also rise against the US currency and the Swiss franc, the strategists wrote. (Bloomberg)