Croatian National Bank (HNB) Governor Boris Vujcic said in Parliament on Wednesday that inflationary pressure is abating, although it remains significant, rejecting claims by some opposition MPs that accession to the eurozone has contributed to inflation growth.

“It is not true that Croatia’s accession to the eurozone has contributed to the higher rate of inflation. Quite the contrary, had we not entered the eurozone the inflation rate would be higher and not lower, as shown by the experience of other countries,” Vujčić said while presenting the HNB’s report on the financial situation, price stability and monetary policy in 2021 and the first half of 2022.

“The inflation rate is 26% in Hungary, 18% in the Czech Republic and 16% in Poland, so much for that,” the central bank governor said, stressing that Croatia’s accession to the eurozone was also helpful with regard to capital markets, public debt and cost stability.

Vujčić said that the inflation rate had started to slow down at the beginning of this year, reaching 10.5% in March. March was the fourth consecutive month to see a decline in the inflation rate, after it peaked at 13% in November 2022.

Fight against inflation to extend into 2024.

“Our forecast is that inflation will continue to decline towards the end of the year, when it is expected to be around 5%. But the fight against inflation is not over and is certain to extend into 2024, when it is expected to come to our target level of 2%,” Vujcic said.

Inflationary pressure is weakening in particular due to declining prices of energy and raw materials on the global market and the gradual removal of bottlenecks in global supply chains, which is alleviating shortages of individual goods. he said.

However, core inflation remains stubborn, and interest rates will continue to be increased in order to continue to reduce inflationary pressure. “The next meeting of the European Central Bank’s Governing Council is next week, and in my opinion we have no choice but to continue to raise interest rates,” Vujcic said.

Responding to a question from MP Zvonimir Troskot (Bridge) as to where foreign currency reserves had disappeared, Vujcic said: “They did not disappear. They are held where they were held before, only now they are called differently — net financial assets of the HNB, in accordance with the eurozone accession procedure.”