PASHA_BANK_ANNUAL REPORT 2023

Overview of 2023 and Expectations for 2024 The year 2023 has been a period dominated by the fight against inflation, brought about by the expansive policies implemented during the pandemic. Central banks are primarily addressing the inflation issue by increasing policy interest rates. During this time, countries are also implementing monetary tightening measures and supply-side policies to prevent their economies from entering into a recession. The U.S. Central Bank (Fed) and the European Central Bank (ECB) state that they will not rush into interest rate cuts for the year 2024. Both central banks emphasize that a prerequisite for starting interest rate cuts is a sustained and significant decrease in inflation. They indicate that they will decide based on developments in the monitored data. While the likelihood of the Fed and ECB initiating a new interest rate hike process is low, the question of how high they will keep interest rates for the year 2024 is being closely evaluated by market participants. Particularly, the slowing growth in European Union economies brings along the risk of recession, increasing the possibility of the ECB starting interest rate cuts earlier. One of the most significant issues for the U.S. economy following the implemented economic policies during the Covid-19 pandemic was inflation. The U.S. consumer inflation, which was around 2.00% before the pandemic, exceeded 8.00% in 2022. This led to inflation-fighting policies becoming a key element in both monetary and fiscal policies for the year 2023. Fight against Inflation in Global Markets 21 PASHA Bank 2023 Annual Report General Information Information on Management and Corporate Governance Principles Financial Information and Risk Management Review