active role of it credit to the economy. weak inflationary pressures, present in the albanian economy, are expected to be dominant in the near future. with 90 % probability of occurrence, inflation is expected to range within the 0. 9 – 3. 6 % interval, four quarters ahead. from the available information, taking into account our projections, the action force of the monetary policy transmission mechanism and other financial stability - related considerations, the bank of albania deems that the monetary policy will remain stimulating during the medium - term period. in our judgement, maintaining the stimulating side of the monetary policy ensures inflation ’ s return to target within a reasonable timeframe, and corroborates the recovery of domestic demand. concluding, i would like to dwell also on the risks related to the above - mentioned projections. first, in the presence of a consolidating fiscal policy and under the current situation of global markets, our growth projections are conditioned by the increase in private consumption and investments. these components of demand have been upward during the first half of the year ; yet, factors contributing to this growth do not appear consolidated. the easing monetary policy contributes to establishing more favourable lending conditions, but it should be followed by sustainable improvements in the labour market, company balance sheets, and business climate as well as boosted confidence on the country ’ s long - term development perspective. second, our projections and the country ’ s economic development remain subject to unforeseen supply - side shocks. the performance of energy production, agricultural sector, oil price, commodity prices, and final product prices in international markets has a significant impact on economic activity and inflation in albania. third, macroeconomic policies should preserve the stimulating mix, as well as the composition and intensity of this mix. implementing consistent policies would contribute to enhancing the confidence at home and reducing the risk premiums. the fiscal policy should be in accordance with commitments for the consolidation of fiscal indicator and settlement of financial obligations to the private sector. monetary policy will continue to remain stimulating, bis central bankers ’ speeches but its extent and duration will be exclusively serving to meet our inflation target. finally, the albanian economy needs comprehensive structural reforms that would enhance albania ’ s competitiveness in international markets and expand our productive potential. without structural reforms, macroeconomic policies would not generate long - term growth for a country. our country should honour all its commitments to the european union, arising from the status of the candidate country. moreover, the public sector should have well - integrated and long -

however, it largely reflects the correction of the upward trend of public debt. the consolidating nature of the fiscal policy is materialised in both increasing revenues and declining public expenditures – mainly capital expenditures. the budget deficit in the first half reached all 22. 2 billion, standing 54. 3 % lower than in the previous year. as with any consolidating fiscal policy, the direct effect of such developments on aggregate demand has been negative. the bank of albania has, however, urged for and supported this fiscal move, being confident that its resultant effect will be positive. in the medium and long term, a lower public debt level decreases risk premiums and increases the economy ’ s capacity to withstand unforeseen shocks. in the short term, a consolidating fiscal policy contributes to creating better lending conditions for the private sector. also, it has enabled the bank of albania to implement a stronger stimulating monetary policy. on the aspect of public finance, in bank of albania ’ s judgement, adopting a fiscal rule that will serve as an instrument for disciplining budget deficit and public debt indicators is indispensible. public expenditure should have a more linear distribution throughout the year and a better compliance with the planned levels. despite the positive pace of economic growth, output gap remains negative and the utilization capacity rate is below its average. the unutilised capacities in the economy have led to low increase in employment and wages, production costs and profit margins, being the main drivers for low inflation rates. imported inflation has been downward because of low inflation rates in our trading partners and the steady performance of the exchange rate. to a large extent, the downward imported inflation has also determined the downward profile of inflation at home during the first half of the year. economic agents ’ inflation expectations remain subdued, not showing any grounds for a rapid increase of it. reflecting the poor performance of inflation and in the presence of a consolidating fiscal policy, the bank of albania has strengthened the easing trend of the monetary policy. following the two cuts in february and may, the key interest rate currently stands at 2. 50 %. the bank of albania has continued to guide the public on the expected direction of the monetary policy in the future and has continued its liquidity - injecting operations in the banking system. our monetary policy has been successful in calming financial markets, mitigating pressures for liquidity and controlling medium - term inflation expectations. being in line with the specifics of particular segments