Further on, Bank of Albania market interventions have been practically inexistent and the exchange rate 3/8  BIS central bankers' speeches  reflected the supply and demand situation in the market. Insofar results show that Bank of Albania interventions have accomplished the objectives. The appreciation pace of the exchange rate has diminished and the activity in the foreign exchange market has returned to normal parameters. In line with these developments, the Bank of Albania kept the direction and intensity of the monetary stimulus unchanged over the second half of the year. The policy rate remained unchanged at 1.0% while the financial market was supplied with the necessary liquidity and informed through the forward guidance on the future path of the monetary policy stance. The accommodative monetary policy implemented by the Bank of Albania has proven successful for boosting economic growth, inducing better utilisation of production capacities and building up inflationary pressures in the economy. The transmission of the monetary stimulus is noted in several aspects: First, the monetary stimulus has led to the reduction of financing costs for households and enterprises. Interest rates are close to historical lows, across all the range of financial instruments. Second, the accommodative monetary policy has led to the expansion of credit in lek, and to the reduction of existing debt service costs. Lek credit to the private sector increased at 6.7%, on average, in 2018.
To minimise the likelihood of deflation, central banks should err on the lax side and aim at significantly higher inflation rates. With this in mind, the IMF asks whether a permanent inflation target of 4% is appropriate. The proposal is nothing less than asking whether in the pursuit of price stability central banks put macroeconomic stability at risk. I do see the temptation for governments to ask for higher inflation in order to monetise the dramatic build-up of public debt in nearly all advanced economies. This is why calling on central banks to raise inflation rates permanently is most unhelpful. It deflects from the most pressing problem that, currently, macroeconomic stability is threatened by the unsustainable position of public finances in nearly all advanced economies. I can only reject the idea of raising inflation rates permanently. I would not like to imagine the consequences if, on top of the current financial fragilities and in an environment of high public debt, the general public were to lose trust in the purchasing power of money. There is no evidence whatsoever to support that deviating from price stability and aiming at an inflation rate of 4% would enhance economic prosperity or growth. On the contrary, no one would seriously deny that inflation has a detrimental impact. The inflation tax does not constitute just another tax distortion. It greatly exacerbates distortions from existing taxes, contributing to a misallocation of resources and a rise in the tax burden, especially for lower-income households, and ultimately depresses economic growth.