ardian fullani : recent economic and monetary developments in albania speech by mr ardian fullani, governor of the bank of albania, at the press conference on the monetary policy decision of the bank of albania supervisory council, tirana, 28 december 2011. * * * today, on 28 december 2011, 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 leave the key interest rate unchanged at 4. 75 %. the supervisory council deemed that the actual monetary conditions are appropriate to meet the inflation target over the medium run and provide the necessary monetary stimulus and to support economic activity in albania. ( let me now proceed with an overview of economic developments and main issues discussed at today ’ s meeting. ) * * * inflation rate in november was 2. 9 %, slightly down by 0. 1 percentage points from the previous month. most of inflation in november was formed by higher prices of processed foods and non - food consumption goods, whereas other items of the consumer goods basket had low inflation rates. recent months were characterised by progressive reduction of inflationary pressures on the economy. on the supply side, prise rise slowdown for main products in international markets and national currency stability were reflected in dampened imported inflation. moreover, the cancelling out of direct administered price increase effects contributed to lower inflation rates during this period. on the demand side, below - potential growth of the albanian economy and under - utilised capacities in the labour and capital markets were reflected in limited pressures on production costs and ultimate prices in the economy. furthermore, the bank of albania ’ s positive experience on inflation control and its reliable monetary policy have contributed to controlling inflation expectations and mitigating transmission of supply shocks on headline inflation. overall, this trend is expected to continue in the period ahead. the absence of direct data on real economy indicators makes a comprehensive analysis of the albanian economy difficult. our judgement is thus based on indirect data, which proxy developments in various sectors of the economy, as well as information filtered from monetary indicators, fiscal indicators, external sector indicators, and businesses and consumer confidence surveys. the analysis of these indicators supports the assessment for positive - but - below potential performance of the albanian economy in the second and third quarters. economic growth was also supported by external demand and public sector demand, whereas private consumption and investments continued to be sluggish

. this decision serves to comply with the medium term inflation target and provides the appropriate monetary conditions for albania ’ s economic activity. bank of albania remains heedful to future economic and financial developments, both at home and internationally, as well as vigilant to fulfil its mandate. bis central bankers ’ speeches