The one-week repurchase agreement rate, following the last cut in January 2013, reached the lowest historical level, to 3, 75%. It is a record low, not only historically but also if we compare it with all other economies in the region, including most new EU member states as well. The Bank of Albania deems that the monetary conditions are appropriate to ensure the meeting of inflation target in the medium run, providing at the same time the necessary monetary stimulus to support domestic demand. However, from the viewpoint of this meeting, the future of monetary policy is what really counts. As stated in the last Statement by the Bank of Albania’s Supervisory Council, the Bank of Albania will continue to pursue a stimulating monetary policy, as long as inflationary pressures remain weak. Furthermore, I would like to ensure the banking system that the operational framework we provide will maintain the same stimulating nature. It aims at preventing banks from any tensions, even sporadic ones, with regard to market liquidity adequacy (its quantity, price and maturity). 3 – Prudential pillar While both first pillars impact indirectly and over an extended period of time, the prudential pillar impacts directly and swiftly on credit recovery. It includes a number of measures that will release financial resources to banks and will encourage them to channel those resources toward lending. Regulatory changes are at the core of these measures: •  Reduced requirements for liquid assets by banks;  •  Changed risk coefficients in the investment structure to boost lending.
If we calibrate that using multipliers from the Bank’s model, cumulative recession probabilities would rise from around 45% to around 65% at a 3-year horizon. These ready-reckoners are, if anything, likely to understate the behavioural impact of a tightening in a nerve-frazzled environment. This suggests that a policy of early lift-off could be self-defeating. It would risk generating the very recession today it was seeking to insure against tomorrow. In that sense, the low current levels of interest rates are a self-sustaining equilibrium: moving them higher today would run the risk of a reversal tomorrow. These self-reinforcing tendencies explain why the glue sticking interest rates to their floor has been so powerful. Taking these risks together, my judgement on the appropriate monetary stance in the UK is relatively little altered from earlier in the year. The current level of interest rates remains, in my view, appropriate to assure the on-going recovery and to insure against potential downside risks to demand and inflation. Looking ahead, I have no bias on either the size or direction of future interest rate moves. Conclusion In Stuck, the boy’s attempts to unstick his kite from the tree come, well, unstuck. The cat, the gorilla and the ocean-liner, along with assorted other objects, get stuck up the tree too. In  10  BIS central bankers’ speeches  trying too hard to unstick his kite, the boy makes a difficult situation worse. Eventually, with the passage of time, the kite comes free of its own accord.