numerous and relate to developments within the country and to “ imported ” developments from international economy. to be more concise, i would briefly highlight : 1. the energy crisis, which during this year appeared earlier than usual and according to different assessments, will continue beyond what the business may envisage in its plans at the beginning of each calendar year. naturally, the effect of the lack of energy is very complex ; it affects directly the productive capacities, creates additional cost ( alternative source of energy ) on final products, and increases the overall uncertainty. i think that these elements are sufficient to create ambiguity in the markets, generating inflationary premises in the economy. 2. during this year we have been faced with another problem. it has to do with an international conjuncture of raised prices, which exerts its impact on our market of goods and services. fuels and cereals are more vulnerable by this conjuncture. the needs of our economy for these two articles are increasing, while the domestic resources are limited, making albania dependant on imports, and in consequence on international market prices. 3. in general, the economy demand is estimated to have been high at end of 2006 and in the major part of 2007. this fact is evidenced in the large credit growth to the economy, in further enlargement of the current account, in increased imports of such goods as vehicles, household electrical appliances, and machinery and equipment. generally, the increased demand at a certain period of time means inflationary pressures on the economy ; therefore we have reasons to be seriously concerned about this problem. 4. nowadays, public expectations for future inflationary developments are in the focus of the efforts of each central bank to ensure long - term price stability. more concretely, it has to do with the perceptions that every economic agent creates about future inflation. in some cases, these expectations are mostly based also on the facts verified in the past. but, successful is that central bank, which succeeds in anchoring these public expectations with a numeric target that it considers as the optimal rate of inflation. therefore, we are much focused in this direction, and i would like to once more emphasise in this meeting the bank of albania ’ s attitude, that we remain determined in our efforts to keep inflationary expectations anchored around 3 percent, a figure that constitutes also our numeric target. to this end, we will continue to orient our political and operational decision - making towards the meeting of this target ”. as a final

reasons that would weaken the financial market efficiency and in consequence the transmission of monetary policy to the economy. the banking system has got all the possibilities and should interpret more correctly all the signals of the bank of albania, on due time and intensity. also, the banking system should be seriously prepared not only with the respective structures, but also with professional human resources. this is a standard requirement, a postulate of modern times, to which we all should be committed at maximum. i would let you know that the bank of albania has already prepared and soon enough will launch a specific package, centred on the efficiency of the financial market, particularly of the banking one. a new law on repurchase agreements, regulatory changes in required reserve maintaining and calculation, rarefaction of treasury bill auctions from the viewpoint of time, and presentation of the base rate are part of this package. all these measures will be implemented as a sole package and will revolutionize the interbank market operation, a vital link of the financial market for monetary policy transmission to the economy. on the other hand, they would make the operational tactics of the bank of albania more efficient. i invite the banking system to become part of this process, actively participating in all consultations of the case that will precede the launching of this package. its suggestions and comments are welcomed at any moment. monetary policy decision - making of the bank of albania is the second issue i would like to deal with. i would like to repeat once more that consumer price stability is the primary target of the institution i govern. recently, i believe you have had the occasion to comprehend from the statement of the bank of albania supervisory council that the risk for an inflationary environment is present. also, we have enlisted in our statements the probable factors, which according to our considerations make the concern real for inflationary pressures to the economy. the data disclosed by instat show that the annual inflation in august 2007 recorded 4. 2 percent, somewhat above the upper limit of the targeted band of 2 - 4 percent. august recorded a high monthly rate, 2. 1 percent, a wholly unusual figure compared to the preceding years. i am confident that we have been understandable when evidencing in our analyses that the causes relate to unforeseeable factors ( unforeseeable shocks ) and other reasons that have to do with the demand of the economy for goods and services. it should be underlined that during the current year the factors of first nature are