sector demand for monetary assets increased. private sector credit growth rates were upward and settled at 14. 0 % in october. credit demand was higher both by businesses and by households ; however, this growth is slow. overall, lending terms offered by the banking system and parameters of capitalisation, liquidity and health are appropriate for funding higher demand for private consumption or investments in the future. latest developments in financial markets continue to be characterised by controlled risk, liquidity and inflation premiums. successive key interest cuts appear to have been transmitted forthwith in the money market. government securities yields in the primary market dropped further, reflecting the key interest rate cut in the economy and the low public sector demand for funding. the key interest rate cut is expected to be transmitted in the future to interest rates on deposits and loans, in accordance with the time lag of the monetary policy transmission mechanism. lastly, a positive development in financial markets at home is the reconfirmation of the actual government bond rating and the country ’ s stable outlook by moody ’ s and standard & poor rating agencies. projections for the economic outlook remain subject to high uncertainties, dictated mainly by developments in the global economy. our analysis and estimates suggest continuation of moderate economic growth rates for the reminder of the year and the next year. economic slowdown in our trade partner countries may be reflected in weaker foreign demand and further deceleration of albanian exports. in addition, space for implementing fiscal stimuli narrowed in response to the growing need for maintaining fiscal stability and controlling public deficit and debt levels. consequently, public sector contribution to aggregate demand growth is expected to be downward in 2012. under these circumstances, the extent and speed of recovery of private sector demand will be crucial for the country ’ s economic growth. as we have stated in earlier communications, bis central bankers ’ speeches the actual monetary conditions are appropriate to encourage private consumption and investments. * * * taking into consideration the information set out above, in the supervisory council assessment, inflationary pressures remain controlled over the monetary policy relevant horizon. the presence of the negative output gap in the period ahead will be accompanied by low inflationary pressures originating from internal demand. in addition, inflationary pressures from global economy developments are projected to be more moderate, whereas inflation expectations are anchored. these assessments are materialised in annual inflation projections ranging within the target band of the bank of albania for the medium run. at the conclusion of discussions, the supervisory council decided to leave the key interest rate unchanged at 4. 75 %

some notable exceptions, appear to move effortlessly from one state of equilibrium to another. adam smith ’ s “ invisible hand ” remains at work on a global scale. because of a lowering of trade barriers, deregulation, and increased innovation, cross - border trade in recent decades has been expanding at a far faster pace than gdp. as a result, domestic economies are increasingly exposed to the rigors of international competition and comparative advantage. in the process, lower prices for some goods and services produced by our trading partners have competitively suppressed domestic price pressures. production of traded goods has expanded rapidly in economies with large, low - wage labor forces. most prominent are china and india, which over the past decade have partly opened up to market capitalism, and the economies of central and eastern europe that were freed from central planning by the fall of the soviet empire. the consequent significant additions to world production and trade have clearly put downward pressure on domestic prices, though somewhat less so over the past year. moreover, the pronounced fall in inflation, virtually worldwide, over the past two decades has doubtless been a key factor in the notable decline in world economic volatility. in tandem with increasing globalization, monetary policy, to most observers, has become increasingly effective in achieving the objective of price stability. but because we have not experienced a sufficient number of economic turning points to judge the causal linkages among increased globalization, improved monetary policy, significant disinflation, and greater economic stability, the structure of the transitional paradigm is necessarily sketchy. nonetheless, a paradigm encompassing globalization and innovation, far more than in earlier decades, appears to explain the events of the past ten years better than other conceptual constructs. if this is indeed the case, because there are limits to how far globalization and the speed of innovation can proceed, the current apparent rapid pace of structural shift cannot continue indefinitely. a couple of weeks ago, i indicated in testimony to the congress that the outlook for the next year or two has materially brightened. but the outlook for the latter part of this decade remains opaque because it is uncertain whether this transitional paradigm, if that is what it is, is already far advanced and about to slow, or whether it remains in an early, still vibrant stage of evolution. * * * globalization - the extension of the division of labor and specialization beyond national borders - is patently a key to understanding much of our recent economic history. with a deepening of specialization and a growing population free to take risks over