gent sejko : overview of albania ’ s latest monetary and economic developments and outlook speech by mr gent sejko, governor of the bank of albania, on the monetary policy decision of the bank of albania ’ s supervisory council, tirana, 4 march 2015. * * * today, on the 4 of march 2015, the supervisory council of the bank of albania reviewed and approved the interim monetary policy report. after scrutinising the current and expected performance of inflation and other economic indicators, the supervisory council of the bank of albania decided to keep the key interest rate unchanged at 2. 0 %. * * * the domestic and external economic environment has generated low inflationary pressures. according to instat data, annual inflation was 1. 3 % in january, up from the rate registered in december. inflation fluctuations in the last two months have been determined mainly by the volatility in food prices. the fall in food inflation in december and its rise in january were driven by developments in international markets and the performance of domestic production. in parallel, the decline in oil prices has generated downward pressure on inflation. prices of other consumer goods ’ categories did not display any significant change. the rise in inflation in january was in line with our projections ; however, the rate of inflation remains below bank of albania ’ s target. the bank of albania evaluates that inflationary pressures will increase gradually and inflation will return to target within the medium term. however, bank of albania evaluates that inflation will remain below the target for the most of this period. its performance will continue to be determined by the degree of recovery in economic growth, supply - side domestic and external shocks, and economic and financial agents ’ inflation expectations. the albanian economy is assessed to have improved in 2014. according to instat data, the economic activity grew by 1. 4 % during the first nine months of the year. we expect the growth rate to accelerate in the fourth quarter, driven by the strong fiscal stimulus in this period. due to damages caused by floods in the south of the country, our projections on the performance of the economy during 2015 are revised slightly downwards. however, their effect is expected to be temporary and the economy is projected to remain in an upward trend in the medium term. economic growth for 2015 is projected to be higher than that in the previous year. the expansion of economic activity will continue to be driven, to a large extent, by private sector growth. foreign demand is expected to play a small positive

policy is less effective when it comes to improving a country ’ s long - term growth potential. structural policies, institutions, research and development play more important roles in this context. but this is not to say that monetary policy is irrelevant for long - term growth. in fact, economic performance requires a growth - friendly environment. monetary policy contributes to such an environment by ensuring a reliable policy framework, a sound financial system, a well - functioning banking system, and macro - prudential policies that prevent excessive price fluctuations. finally, i do dare to confront this meeting of economists with a rather philosophical question – a question, however, that has already been asked by j. m. keynes and which is today being frequently repeated especially among young people : what about the connection between economic growth and human well - being? is there not an increasing need to look not only at the quantity but also at the quality of economic growth? this is a very broad field indeed, but questions like these may point to some aspects that also central bankers may have to take into immediate consideration. at the recent, highly interesting ecb forum on central banking in sintra, there was a discussion on structural reforms – which, as you know, is a mantra in all ecb statements. one of the eminent economists attending the conference asked what may be the human costs of certain forms of structural reform. so e. g. what forms of increased flexibility in the labor markets are really welfare improving and what forms of increased insecurity, involuntary mobility, reduced chances for family life may have long - lasting negative welfare – and may be also outright growth – effects? and i may add : would such a perspective lead to different priorities for policies that are intended to reduce unemployment? what does this mean for our standard concepts of potential output and a natural rate of unemployment, which the ecb by the way sees at 10 %, compared to 5 % in the u. s. a.? you may know the famous remark by george bernard shaw : “ economists know everything about prices and nothing about values. ” i trust that this will not be the motto of our meeting! this brings me to the end of my introductory remarks. to conclude, i look forward to having a day and a half with you to discuss these important issues of economic policy from a multitude of perspectives. i hope you will find our economics conference a useful and an insightful event. bis central bankers ’ speeches