On the other hand, the Bank of Albania, in its inflation outlook, has factored the projections on the situation of fuel and food items made so far by the IMF and FAO. In the absence of added and unpredictable supply shocks, or second round chain phenomena, inflation rate is expected to be in line with the Bank of Albania target. BIS central bankers’ speeches  1  I would like to continue with a more detailed analysis of current and expected developments in the Albanian economy and financial markets, also assessing their implications on the expected consumer price inflation. Economic activity In the absence of direct data and based on a number of indirect indicators, the Bank of Albania assesses that the Albanian economy continued to grow during the fourth quarter of 2010. The economic growth was supported mainly by the external demand for Albanian exports. However, domestic demand has shown lately signs of recovery, as evidenced by the positive trend of bank lending, indirect consumption indicators and improved Economic Sentiment Indicator of the Albanian businesses and consumers. Consumption and private investment, the two most important components of aggregate demand, experienced a slow progress during 2010. While disposable income of the Albanian consumers is considered to have increased in real terms, high uncertainty and tightened lending terms and conditions by the banking system deterred the domestic consumption. On the other hand, the Albanian businesses encountered insufficient demand for them to use their full capacities and higher financing costs.

Ardian Fullani: Recent economic and financial developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the press conference on the Bank of Albania’s Supervisory Council decision on monetary policy, Tirana, 23 February 2011. *  *  *  Today, on 23 February 2011, the Supervisory Council of the Bank of Albania reviewed and approved the monthly Monetary Policy Report. Based on a thorough analysis of Albania’s latest economic and monetary developments and discussions on their performance outlook, the Supervisory Council of the Bank of Albania decided to leave the key interest rate unchanged at 5.00%. The Supervisory Council confirmed that the actual monetary conditions remain appropriate for meeting the medium-term inflation target and for supporting the domestic economic activity. I would like to proceed with a brief overview of economic developments and main issues discussed at today’s meeting of the Supervisory Council. *** Recent data from the global economy confirm the positive underlying momentum of the economic activity in developed and developing economies. Despite the gradual withdrawal of fiscal and monetary stimulus, economic growth has been stable, as a result of the recovery in the private sector demand in developing countries. On the other hand, the higher demand has triggered a price increase in commodities, basic products and food items, thus impacting the shift of the inflationary pressures upward. Nevertheless, globally, consumer price inflation remains still contained, as long as major economies continue to be characterised by below-potential economic growth.