ardian fullani : overview of albania ’ s latest economic and financial developments 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, 28 august 2012. * * * today, on 28 august 2012, the supervisory council of the bank of albania reviewed and approved the monthly monetary policy report. based on the analysis of albania ’ s latest economic and monetary developments and following discussions on their performance outlook, the supervisory council of the bank of albania decided to keep the key interest rate unchanged at 4. 00 %. the supervisory council deems that the monetary conditions are appropriate to meet the inflation target in the medium run and provide the needed monetary incentive to support the domestic demand. let me now proceed with an overview of the economic and monetary developments and key topics discussed at today ’ s meeting. * * * annual inflation marked 2. 7 % in july, up 0. 5 percentage points from a month earlier. the inflation rate went up mainly due to higher unprocessed food prices during this month. similarly, non - food consumer prices added their contribution to annual inflation as a result of higher oil prices. regardless of minor fluctuations, the contribution of other goods of the basket to inflation remained steady. despite rising, consumer price inflation remains in the lower interval of bank of albania ’ s inflation target band. from the macroeconomic viewpoint, it rose due to impact of transient factors, while the poor performance of aggregate demand continues to generate low pressures on consumer prices. furthermore, increase in production costs remains weak, imported inflation remains low, and inflation expectations of economic agents remain anchored. second - quarter data on the economy point to slow growth of economic activity during this period. while some of the indirect indicators signal improvement from the first quarter, consumers ’ propensity to save continues. this behaviour is reflected in the postponement of substantial expenditures, increase in deposits and investments in securities, and decline in consumers ’ demand for bank loans. private investments remain weak, reflecting the poor performance of the final demand in the economy. capacity utilisation rate remains low, whereas exports of machineries and equipment fell 9. 5 % in the second quarter, in annual terms, after expanding about 1. 5 % in the first quarter of the year. the banking system continued to grant credits for private investments at rates comparable to those of the first quarter of the current year. the fiscal policy pursued its consolidation during the first

market functioning has improved since the strains experienced in march, we have gradually reduced the pace of these purchases. to sustain smooth market functioning and thereby foster the effective transmission of monetary policy to broader financial conditions, we will increase our holdings of treasury securities and agency mortgage - backed securities over coming months at least at the current pace. we will closely monitor developments and are prepared to adjust our plans as appropriate to support our goals. to provide stability to the financial system and support the flow of credit to households, businesses, and state and local governments, the federal reserve, with the approval of the secretary of the treasury, established 11 credit and liquidity facilities under section 13 ( 3 ) of the federal reserve act. the june monetary policy report provides details on these facilities, which fall into two categories : stabilizing short - term funding markets and providing more - direct support for credit across the economy. to help stabilize short - term funding markets, the federal reserve set up the commercial paper funding facility and the money market liquidity facility to stem rapid outflows from prime money market funds. the fed also established the primary dealer credit facility, which provides loans against good collateral to primary dealers that are critical intermediaries in short - term funding markets. to more directly support the flow of credit to households, businesses, and state and local governments, the federal reserve established a number of facilities. to support the small business sector, we established the paycheck protection program liquidity facility to bolster the effectiveness of the coronavirus aid, relief, and economic security act ’ s ( cares act ) paycheck protection program. our main street lending program, which we are in the process of launching, supports lending to both small and midsized businesses. the term asset - backed securities loan facility supports lending to both businesses and consumers. to support the employment and spending of investment - grade businesses, we established two corporate credit facilities. and to help u. s. state and local governments manage cash flow pressures and serve their communities, we set up the municipal liquidity facility. the tools that the federal reserve is using under its 13 ( 3 ) authority are appropriately reserved for times of emergency. when this crisis is behind us, we will put them away. the june monetary policy report reviews the implications of these tools for the federal reserve ’ s 2 / 3 bis central bankers'speeches balance sheet. many of these facilities have been supported by funding from the cares act. we will be disclosing, on a monthly