generated by the rise in employment, wages and production costs was offset by the rapid appreciation of the domestic currency over the first half of the year. the exchange rate appreciation was a decelerating factor for achieving the inflation target. the exchange rate has moved along a slight appreciation path over the last three years, driven by fundamental factors that dictate its behaviour such as : improvement of the balance of trade exchanges with abroad, high levels of foreign direct investments, and reduction of risk premia in domestic financial markets. yet, beyond these effects, the exchange rate was subject to certain shocks in the first half of 2018. these shocks led to a temporary imbalance of the demand and supply for foreign currency and contributed to creating expectations for further appreciation of the exchange rate, and were accompanied also by a change in the behaviour of certain operators in the economy. they initiated a fast appreciation spiral in the second quarter and were accompanied by a disorder of the functioning of the domestic foreign exchange market. under these circumstances, the supervisory council judged that the rapid appreciation of the exchange rate jeopardised the achievement of our inflation target in the medium - term horizon. consequently, in full compliance with the price stability objective and without affecting the free exchange rate regime, in june the council decided : to lower the policy rate from 1. 25 % to 1. 00 %. in parallel, overnight loan and overnight deposit rates were also reduced ; and, to initiate a foreign currency purchasing programme, aimed at decelerating the pace of exchange rate appreciation and creating the premises for a normal trading activity in the domestic foreign currency market. lowering the policy rate was aimed at further reducing the costs of financing and mitigating appreciation pressures on the exchange rate. the intervention in the domestic foreign exchange market, as a temporary and extraordinary instrument of the monetary policy, was considered as necessary under the conditions when the space for further lowering the policy rate was limited. interventions in the foreign exchange market were concentrated in the summer months. further on, bank of albania market interventions have been practically inexistent and the exchange rate 3 / 8 bis central bankers'speeches reflected the supply and demand situation in the market. insofar results show that bank of albania interventions have accomplished the objectives. the appreciation pace of the exchange rate has diminished and the activity in the foreign exchange market has returned to normal parameters. in line with these developments, the bank of albania kept the direction and intensity of the monetary stimulus unchanged over the second half of the year. the policy

through improvements in infrastructure and financial education. other activities in the field of statistics, the bank of albania continued its work for the methodological approximation of statistics with international standards and their alignment with the acquis communautaire. in cooperation with instat and with expertise from the european union, the bank of albania coordinated the work to develop indicators of macroeconomic imbalances for albania. during 2018, the eurostat carried out an evaluation mission of the statistical system in albania, which assessed that the statistics of the bank of albania are in line with the principles of the european statistics code of practice. as at the end of 2018, the international reserve reached eur 3. 4 billion, sufficient to cover 6. 7 months of imports of goods and services and 156 % of the short - term external debt. in order to 6 / 8 bis central bankers'speeches increase the flexibility of managing the needs for foreign currency liquidity, an agreement was finalised with the bank for international settlements for a foreign currency credit line. the agreement constitutes an important mechanism available to the bank of albania in the event of an emergency situation. research continued to support the decision - making process for formulating and implementing bank of albania ’ s policies. during 2018, the focus of scientific research was on issues related to monetary policy, safeguarding financial stability, and coordinating these two objectives. the results of the research are shared with national and international experts in scientific panels and are published in discussion papers. an important part of bank of albania ’ s development strategy is the establishment of transparent and long - standing relations with the public. the bank of albania has fostered its communication with the public to provide its opinion on economic and financial developments, as well as on the bank ’ s role in keeping macro - financial balances. also, it complied with the obligations under the law “ on the right to information ” duly informing the public, as requested. during the year several national and international conferences and forums were organized, discussing topics that are at the centre of the current debates and of interest for the country ’ s development. notably, the annual conference organized in cooperation with the london school of economics and political science this year was dedicated to new approaches in the framework of monetary policy and the challenges to economic integration. this conference brought together distinguished personalities of central banking from advanced economies and regional countries, central bank governors, academics and representatives of international regulatory authorities. conferences and discussion forums served to foster cooperation with our key partners such as the albanian financial