Like other central banks, we are constantly refining our forecasting tools to enable us to become better at predicting the future. Hopefully we will gradually increase the precision of our forecasts. However, at  2  BIS Review 101/2006  the end of the day it is not realistic to believe that we should be able to predict this type of event in its entirety. With regard to developments in recent years, it is also an important insight that inflation has been held down by forces that are essentially favourable for the economy. To put it another way, developments have been dominated by positive changes in what is known as the supply side of the economy. The fact that prices are pressed down by increased competition and increased foreign trade is something we all can benefit from – as consumers. And the fact that productivity growth in the economy is high should benefit everyone in the long term, in the form of increased welfare. Our monetary policy strategy Before we look ahead, it may be useful if I explain how we reason in general when making our interest rate decisions. The objective of monetary policy is price stability – in other words, low inflation. We have specified this as consumer prices, measured according to the consumer price index, increasing by two per cent a year. As it takes time before interest rate changes have an effect, monetary policy must be based on forecasts of the inflation rate a couple of years ahead.
Fadilj Bajrami: ECB regional cooperation programme with central banks in the Western Balkans Address by Mr Fadilj Bajrami, Vice Governor of the National Bank of the Republic of Macedonia, on the occasion of the third Programme Steering Committee Meeting of the ECB Regional Cooperation Programme with central banks in the Western Balkans, Pristina, 27 March 2015. *  *  *  Dear Governor Hamza, Dear Deputy Governor Gjoni, Dear Mr. Fehlker, Dear Mr. Chlad, Representatives from central banks, Ladies and Gentlemen, I am glad to be here, in Pristina, with you today, on the occasion of the third and final meeting of the Steering Committee, to officially mark the successful completion of the joint cooperation programme between the ECB and the national central banks of the Eurosystem, on the one hand, and the central banks of the Western Balkans, on the other. The inclusion of the three central banks in this programme, which aims to strengthen their institutional capacity and align their operations with the central banking standards of the EU, is of enormous importance for the region, given the role of central banks in the EU accession process. Namely, this regional approach of the ECB allows raising the level of compliance with the EU standards and policies, but also creates an opportunity to advance the cooperation between the central banks in the region and the central banks of the EU.