the surplus was 63 percent lower than the previous year. the long - term stability of the external position of our economy remains a weakness that requires constant consideration in terms of the formulation and implementation of economic policies. the slow growth rates of domestic demand were reflected in the low demand for money. in april, money supply posted an annual nominal growth of 7. 5 percent. the creation of money in economy continues to be primarily sustained by the growth of the banking system ’ s net foreign assets. in april, private sector credit posted an annual growth of 7 percent. banking loan data show a positive dynamics for the last two months, displaying higher monthly growth rates of loans and particularly of investment loans. however, the lending growth rates are still low owing to the economic agents ’ moderate demand for loans and the tight lending standards applied by the banking system as a result of its increased prudence. the growth of deposits improved the banking system ’ s balance sheet and its liquidity and capitalization indicators. this positive performance needs to be reflected in a more active role of the banking system in terms of lending. the improved liquidity indicators, the contained public sector borrowing in the domestic financial market, the lower risk premiums and the anchored inflation expectations have led to lower interest rates in the financial market. the latter appears more relaxed and the trading volumes have increased. the decrease of interest rates on deposits, loans and government securities persisted in the last two months ; hence providing appropriate conditions for boosting economic activity. the bank of albania considers that the same tendency should continue to be sustained by the contribution of all abovementioned factors. this year ’ s economic developments have yielded low inflation pressures. cpi annual inflation marked 3. 1 percent in may, close to the bank of albania ’ s target. annual inflation rate was downward for the third consecutive month, confirming our expectations and forecast for the transitory supply - side shock effects. on the other hand, domestic demand - side pressures have been downward ; this has been attested by the historical lows of core and non - traded inflation, 1. 2 and 1. 3 percent, respectively. the bank of albania has pursued a prudent monetary policy. in full observance of the inflation target, the bank of albania continued to be present in the market through the provision of the required liquidity to the banking system. in its meeting today, the supervisory council approved the change of its monetary policy operational objective, which as from today will be steering the short - term interest rates in

the medium term. the russian invasion of ukraine and the subsequent financial sanctions have clearly caused substantial volatility in financial markets. however, these factors have so far not caused severe strains in money markets or liquidity shortages in the euro area banking system. shortly before the russian invasion of ukraine, ecb banking supervision published the results of the 2021 cycle of the supervisory review and evaluation process ( srep ). the findings of that annual assessment indicate that significant institutions have maintained solid capital 4 / 6 bis central bankers'speeches positions, with most banks going beyond the levels dictated by capital requirements and guidance. of course, the 2021 srep cycle did not envisage the current war in ukraine nor the sanctions on russian counterparts that followed. yet, the srep results do reflect the general resilience of europe ’ s banking sector, which should help avoid disruptions in financing conditions as the economy and financial system are adjusting to the evolving circumstances. as regards russia, the ecb continues to monitor direct and indirect channels of impact on european banks, but none have been disruptive so far. outlook for monetary policy let me now turn to how this assessment of the euro area economy outlook translates into the outlook for monetary policy. it is a well - established practice in monetary policy that in times of uncertainty prudent policy calls for gradualism, as was also alluded to in a speech last week by ecb president christine lagarde. this holds particularly true when we approach potential turning points in the monetary policy cycle. in determining the appropriate degree of gradualism, the treaty gives us a compass – the principle of proportionality. a compass that points to price stability and – in line with our monetary policy strategy – has its needle moved by the evidence. against this backdrop, already in december we announced our intention to end the net asset purchases conducted under our pandemic emergency purchase programme ( pepp ), which in our recent meeting we confirmed we would do at the end of this month. moreover, in light of the revised inflation outlook, we have assessed that net asset purchases under our other purchase programme can be discontinued in the third quarter if the incoming data confirm that the medium - term inflation outlook will not weaken after net asset purchases. this strengthens our policy optionality by removing obstacles for potential policy rate normalisation beyond the horizon of our asset purchases. any adjustments to the key ecb interest rates will take place some time after the end of our net asset purchases and will be gradual and based on