However, as I mentioned earlier, our experience shows that there is still room for monetary policy manoeuvre even at the zero lower bound. Using the unconventional measures I have described, the SNB certainly was able to relax monetary policy even further and thereby successfully ward off the risk of deflation. So in times of crisis, the apparently greater monetary policy freedom with a higher inflation rate would be illusory. Moreover, a higher rate of inflation in normal times would create costs and threaten macroeconomic stability. Costs would arise even if the central bank were successful in keeping inflation constant at the desired level, and thus enabled households and companies to correctly anticipate the inflation rate. Experience shows, however, that the inflation rate cannot be fine-tuned and a higher level of inflation often goes hand in hand with large fluctuations in inflation rates. It then becomes almost impossible to correctly factor inflation into calculations, leading to the misallocation of resources, as well as random and undesirable income and asset redistributions. In addition, it is generally the most disadvantaged members of society who bear the brunt of inflation, as they have only limited means of protecting themselves against it. But, above all, higher and fluctuating inflation rates would undermine public confidence in the central bank. Credibility, built up painstakingly over decades, would quickly be eroded. The central bank would lose control of inflation and inflation expectations. Moreover, as inflation rose higher, pecuniary benefits such as salaries would increasingly be indexed, which would amplify the stickiness of inflation.

Gent Sejko: Prospects and challenges facing Albania Statement by Mr Gent Sejko, Governor of the Bank of Albania, at the conclusion of discussions on the eighth review of the arrangement with the International Monetary Fund, Tirana, 28 June 2016. *  *  *  In the last two weeks we have been engaged in intensive discussions with IMF Mission representatives, in the framework of the review of the IMF arrangement. The discussions focused on: the analysis of the current situation of the Albanian economy and financial system; identification of development prospects and challenges facing Albania; and the policies to be implemented with a view to supporting the country's development. The conclusions of our discussions may be summarised in three main points: (i)  Economic activity appears upward and the development outlook remains positive. (ii)  Yet, the external environment is unfavourable and the Albanian economy continues to face structural weaknesses, which decelerate the pace of growth. (iii)  Therefore, the monetary and fiscal policies should continue to generate a prudent economic stimulus, whereas structural reforms should accelerate their pace. In this context, the Bank of Albania deems that the arrangement with the IMF and the measures envisaged as part of the Eighth Review provide a consistent framework for drafting and implementing a programme for the country’s development. Let me now present in greater detail the opinion of the Bank of Albania. The growth pace of the Albanian economy continues to show progressive improvement.