annual terms, due to some balance sheet adjustments in individual banks, poor performance of lending to households and contraction in corporate lending. new available information keeps our baseline projections for the economic outlook unchanged. the albanian economy is expected to record low and positive growth rates, albeit substantially below potential. in the absence of room for stable fiscal stimulus, the growth of aggregate demand in the short - term period is expected to be driven by the external demand. in the long run, the magnitude of economic growth will be determined by the performance of consumption and private investments. below - potential growth will give rise to weak demand - side inflationary pressures. supply - side pressures will also be subdued in the period ahead. in the absence of unexpected supply - side shocks, annual inflation is expected to be low in the quarters ahead. at the end of discussions, the supervisory council decided to keep the key interest rate unchanged, at 3. 5 %. the council notes that the current monetary conditions are appropriate to ensure our inflation target is met in the medium - term period, providing at the same time proper monetary stimulus to recover private demand. in particular, the rapid drop in the yields over the past month reflects the low key interest rate, low inflation expectations and the reduced government borrowing from the domestic markets. the drop in the yields, in turn, provides room for lower rates on private sector credit. the projection of a similar setting for the future would allow better monetary policy transmission to the economy. bis central bankers ’ speeches

ardian fullani : overview of recent economic developments in albania speech by mr ardian fullani, governor of the bank of albania, on the monetary policy decision - making of the bank of albania ’ s supervisory council, tirana, 25 september 2013. * * * today, on 25 september 2013, the supervisory council of the bank of albania reviewed and approved the monthly monetary policy report. based on the most recent economic and monetary developments in albania, and following the discussions on their outlook, the supervisory council of the bank of albania decided to keep the key interest rate unchanged, at 3. 5 %. the council notes that the inflationary pressures from the real and financial sector of the economy are weak and will remain so. this setting requires persistence of the stimulating monetary policy in the period ahead. the monetary stimulus, transmitted through the low key interest rate and continuous injection of liquidity, provides the required conditions for meeting our inflation target in the mediumterm period. let me now proceed with an overview of economic developments and key issues discussed at today ’ s meeting. according to instat's data, annual inflation fell to 1. 2 % in august. the rapid fall in inflation over the past two months was mainly attributable to the low rise in food prices, and particularly in seasonal food prices. the negative inflation of non - food consumables and housing prices also drove annual inflation down. similar to the previous months, the inflation of other basket items'goods and services remained low and positive. despite the generally weak inflationary pressures, the supervisory council notes that the low inflation rates of the past two months were driven by transitory supply - side factors. the analysis of macroeconomic factors suggests that the contained consumer prices continue to reflect, to a large extent, the low demand in the economy and the negative output gap. the low capacity utilisation rates have subdued the rise in wages, producer prices and profit margins. imported inflation has also been low due to the low inflation rates in albania's trading partners and the stable exchange rate. lastly, the performance of liquidity and inflation expectations is in line with the low inflation rate. there is scarce new information about developments in the real economy in the second and third quarter of 2013. the analysis of available indirect data signals positive, albeit low, growth. unlike the previous quarters, the public sector was the main driver of aggregate demand growth in the second quarter, whereas net exports made a slightly negative contribution. private sector demand remains weak