Changes in expectations about when and how fast it will finally occur have affected world financial markets significantly. By contrast, in the Eurozone and other developed and emerging economies, monetary policy has become more expansionary, largely responding to the lower inflation figures and lower  BIS central bankers’ speeches  1  medium-term inflation outlook. Such scenario is quite opposite to what we are seeing in Chile and Latin America in general. The Eurozone showed a more stable output trajectory towards the end of 2014, driven by Germany. Preliminary first-quarter figures suggest that Germany will continue to lead the bloc. It is also worth mentioning that in 2014 Spain posted positive GDP figures after three years in recession. Meanwhile, Italy and France continue to show meager results. All in all, in the past few months the region’s growth prospects have improved. In our baseline scenario, we expect the Eurozone to grow 1.5 percent this year, up from 1 percent in December. Still, there are some risks relating to the political situation, especially what may happen in Greece. About Latin America, there is a marked deterioration of the region’s economies, which is compounded with lower commodity prices and in some countries, public and private expenditure imbalances. So while the main economies in the region grew on average nearly 4 percent between 2010 and 2013, in 2014 they barely grew 0.7 percent in 2014 and are expected to grow by 0.8 percent this year.
Moreover, the space for fiscal stimulus has narrowed, as a result of the orientation of the fiscal policy towards maintaining fiscal parameters stability. Under these circumstances, Albania’s economic growth will be determined mainly by the performance of consumption and private investment. The latter is expected to be driven by eased domestic lending terms during 2012, but will suffer, at the same time, from the uncertainty and hesitation of consumers and private businesses. The Bank of Albania deems that the second half of 2011 marked a turning point towards a more normal consumer behaviour, which should be encouraged and supported in 2012. *** Taking into consideration the information set out above, the Supervisory Council holds that pressures on consumer prices at home remain low over the monetary policy relevant horizon and they have shifted on the down side over the past months. On the demand side, below-potential economic growth will continue to generate low inflationary pressures as shocks from the supply side are expected to be moderate. At the conclusion of discussions, the Supervisory Council decided to cut the key interest rate by 0.25 percentage points bringing it down to 4.25%. This decision aims to provide the appropriate monetary conditions to meet the medium-term inflation target. In addition, the easing of monetary policy provides higher support for the development of the private sector’s demand in our economy. 2  BIS central bankers’ speeches