ardian fullani : overview of albania ’ s recent economic and financial market developments speech by mr ardian fullani, governor of the bank of albania, at the press conference on the monetary policy decision of bank of albania ’ s supervisory council, tirana, 31 july 2013. * * * today, on 31 july 2013, the supervisory council of the bank of albania reviewed and approved the monetary policy statement of the bank of albania on the first half of 2013. based on the latest monetary and economic developments in albania, and following the discussions about their outlook, the bank of albania ’ s supervisory council decided to lower the key interest rate by 0. 25 % percentage points to 3. 50 %. lowering the key interest rate would improve the conditions for a higher aggregate demand, hence helping inflation fall back toward the bank ’ s 3. 0 % target. further easing of monetary policy takes into account expectations for a contractionary fiscal policy over the second half of the year and makes room for a fast and low - cost adjustment of public finances. let me now proceed with an overview of the economic developments and key issues discussed at today ’ s meeting. the first months of 2013 confirmed our assessments of albania ’ s slow economic growth and weak inflationary pressures. albania ’ s economic activity continues to suffer from sluggish aggregate demand reflecting economic agents ’ uncertainties about the future, relatively tight lending standards, and economic weaknesses of our main trading partners. however, amid a challenging macroeconomic environment, albania ’ s economic and financial stability remains stable. in the first half of the year, inflation remained low due to weak demand - side pressures and anchored inflation expectations. the latter reflect bank of albania ’ s prudential monetary policy. this policy has enabled the long - term interest rate cut and has contributed to maintaining the banking system soundness parameters. also, albania ’ s improved external position, together with the national currency ’ s stability and financial sector ’ s overall sound balances, have further strengthened the financial stability and ensured one of the pillars necessary for its long - term development. the second - quarter inflation turned out 2. 2 %, a lower rate than in the first quarter. lower agricultural product inflation and steady prices for other cpi basket items shifted this quarter ’ s inflation down. agricultural price inflation accounted for about 90 % of the headline inflation, reflecting both the price volatility of agricultural products and their relatively high share in the cpi basket. from the macroeconomic perspective, the presence of spare productive capacity continues

society not yet fully served ; considers that the cooperation between us ( the bank of albania and the banks ) remains decisive, particularly regarding the alignment of its legal and regulatory framework with that of the european union ; supports the digital transformation of the banking sector as a trend and an opportunity to improve banking services, making them more accessible and faster for the public, while strengthening at the same time public confidence in regard to the latter ; last, we forecast to advance towards more stable banking practices, by supporting projects that affect positively the environment. in conclusion, on this 25th anniversary, let us renew our commitment to : ( i ) dedication, 3 / 4 bis - central bankers'speeches ( ii ) integrity, and ( iii ) high quality service to the public. despite the achievements and challenges, which will be present over the next years, i am confident that the albanian banking sector will become a synonym of sustainability and innovation. thank you for your commitment and trust in our mutual cooperation. happy 25th anniversary! 4 / 4 bis - central bankers'speeches