Softić announces interest rate hikes on loans, fixed rates are not a concern

SARAJevo, (Patria) - Loans will become more expensive, but only in the medium term, said the head of the Central Bank of Bosnia and Herzegovina, Senad Softić.

He emphasized that we are witnessing negative interest rates, and that this is not a normal situation.

"Such a high inflation rate required interest rates to be raised. The European Union did not do it immediately. The US and the UK did it immediately. The European Union announced an increase in response to inflationary pressure. I cannot estimate, but it would be logical for interest rates to increase because that is the system."

When it comes to fixed interest rates, citizens should not worry, said Softić.

"Those who have variable interest rates should shorten the term or look for a fixed rate. Regarding new loans, it should be known that our system is liquid, banks have large reserves. The interest rate will depend on competition, and an increase in interest rates will occur in the near future. Not everything is black and white. A model will be sought."

The governor also spoke about the impact of Russia's attack on Ukraine and the war, which currently has no end in sight.

"Fortunately, it does not affect the financial sector in BiH much. There were two banks connected to Russia that were excluded from the SWIFT system, and the entity agencies carried out restitutions, and the financial sector is stable," Softić told BHT.

When we talk about foreign trade with these two countries, it is naturally higher in the case of Russia.

"We import the most oil and gas. It is important to point out that in 2011, trade with Russia was 11 percent. Now we have 2.9 million, and that is BiH's obligation to Russia. The direct impact is not large, but the indirect impact is, as in the whole world."

Speaking about foreign exchange reserves, the governor assured us that we have enough, worth 5.7 billion KM, slightly less than on December 31 last year.

"We have sufficient foreign exchange reserves and we are only focusing on stable investment of these reserves. The domestic currency is also stable. Our convertible mark is fully convertible into euros. Our reserves are a guarantee, and we guarantee that everything is covered by euros and we are not taking any risks that would jeopardize monetary policy."