This reflects lower international commodity and producer prices, a slower increase in global consumer prices and a stronger krone exchange rate. As these effects wane, and if global economic growth picks up in line with expectations, import price inflation may reach a more normal level. If growth in the global economy picks up again as we have assumed, we expect consumer price inflation to be about 2½ per cent in two years. Meanwhile, consumer price inflation may be somewhat lower due to the downturn abroad and the decline in prices for imported goods. Norges Bank presented its most recent Inflation Report in October 2001. In the light of international developments, and other factors, we considered the probability that inflation two years ahead would be lower than 2½ per cent to be greater than the probability that it would be higher. This was the basis for Norges Bank’s decision to reduce its key rate by 0.5 percentage point to 6.5 per cent in December. Norges Bank’s assessment of the outlook for inflation remained unchanged following the Executive Board’s monetary policy meeting on 23 January this year. BIS Review 8/2002  3  4  BIS Review 8/2002  BIS Review 8/2002  5  6  BIS Review 8/2002  BIS Review 8/2002  7  8  BIS Review 8/2002  BIS Review 8/2002  9  10  BIS Review 8/2002  BIS Review 8/2002  11  12  BIS Review 8/2002
The Bank of Albania will support this process by cooperating with the banking industry and improving the regulatory and supervisory framework. For the supervisory authorities of the financial system, the recommendations relate to strengthening the preventive and management framework of risks and, in this regard, improvement of the legal, operational and inter-institutional cooperation infrastructure is recommended. Concluding, I would like to reiterate our message: the prospects for Albania’s development remain positive. The economic and financial stability, geographical position and natural resources, and integration with the European Union make us optimistic about Albania’s future development. I invite you all to share in this vision and work together to make it a reality. I assure you that the Bank of Albania, as the supervisory authority, will undertake all the necessary actions, under its scope of activity, to support the industry to successfully overcome these challenges and ensure that the sector remains well capitalised and liquid. Thank you! BIS central bankers’ speeches  3