the other, real interest rates will be lowered, thereby generating the effect of powerfully stimulating economic activity. as the real economy improves due to such stimulus, the actual inflation rate will rise, which will lead to a further rise in inflation expectations : such a virtuous cycle can be expected to operate. is such a mechanism actually at work? so far, the qqe has been steadily exerting its intended effects. surveys on various economic entities and break - even inflation rates have suggested a rise in inflation expectations on the whole. as for nominal interest rates, in contrast with other advanced economies in which long - term interest rates have been rising in tandem with economic recovery, japan ’ s long - term interest rates have been hovering in a stable manner at an extremely low level of around 0. 6 percent. under such financial conditions, japan ’ s economy has continued to recover moderately in association with a virtuous cycle among production, income, and spending. on the price front, the year - on - year rate of change in the cpi excluding fresh food was negative when the qqe was introduced but has since improved, registering a positive figure of around 1¼ percent in the latest data. one year has passed since the introduction of the qqe, and we have reached the midpoint of “ about two years ” that we specified. so far, japan ’ s economy has been following the path toward achieving the 2 percent price stability target as expected, and we have become increasingly confident that the anticipated transmission mechanism of the qqe is actually working. in japan, two rounds of consumption tax hikes are scheduled. based on the experience of the economy going into recession when consumption tax was raised last time, in 1997, there are some concerns that the same might happen again. however, looking at the economic conditions of that time, the economic growth rate plunged immediately after the tax hike but subsequently showed signs of recovery. the economy seemed to have instead been affected substantially by a series of failures of japanese major financial institutions and by the asian currency crisis that took place just when the economy showed nascent recovery. by contrast, at present, japan ’ s financial system has been maintaining stability and emerging economies have become more resilient against negative shocks. the current conditions are quite different from those in 1997. taking these differences into account, the bank believes that, even assuming two consumption tax hikes, the virtuous cycle in the economy will not be interrupted and japan ’ s economy will

all its dimensions will enhance productivity and help to tackle the increasing competition, in national level as well as in both regional and global levels. second, investments in the development of human capital, through the improvement of the education system and the creation of specialized programs for vocational training, is crucial for empowering human capital. creating incentives 2 / 3 bis - central bankers'speeches for the return of the diaspora and improving working conditions will help curb the emigration of young people and create an environment that encourages them to build their future in albania. third, the optimum utilization of the country's natural resources, including energy, mineral, agricultural, and tourism resources, requires a planned and coordinated strategy to avoid adverse consequences. this strategy must further guide public development policies, entrepreneurial and financial resources of the private sector, as well as an efficient distribution of banking credit flows. the implementation of these measures requires close cooperation between the public and private sectors. each actor should contribute in their area of expertise, within legal frameworks and with a common approach, to ensure that these initiatives succeed. the academy plays an outstanding role in this regard. to this end, i find it appropriate to commend " luarasi " university for its valuable contribution to the education of the new generation, transforming in a short period of time into a prestigious institution of professional education. " dear guests, concluding, i would like to highlight that albania has an extraordinary potential for development. a comprehensive effort from all actors is needed to realize this potential. in this context, the bank of albania will continue to be an active partner in the country's economic development. in our vision for the future, the bank of albania aims to be the guarantor of financial stability and also a catalyst for long - term economic development, establishing the conditions for a more sustainable, competitive, and fair economy. our monetary and macroprudential policies will continue to focus on preserving the monetary and financial stability as a foundation for sustainable and inclusive growth. also, we will continue to work on the advancement and modernization of the payment system and our financial market, based on the best and most successful global practices. thank you, and i wish you a successful conference! 3 / 3 bis - central bankers'speeches