The sluggish consumption and investments were reflected in a low demand for loans and mainly oriented towards shorter-term maturities. On the other hand, higher prudence by banks in crediting was reflected in tighter terms of credit supply. Financial markets were generally stable and evidenced improved liquidity conditions and controlled risk premia. Money market interest rates pursued a downward trajectory, due to easing policy of the Bank of Albania and satisfactory liquidity levels. While costs for the private sector credit were lower than a year earlier, the sluggish performance of the economy and uncertainties about its outlook made the trend appear more moderate in interest rates applied on lending to this sector. BIS central bankers’ speeches  3  Pressures on foreign exchange market were low and the exchange rate of the national currency against the major foreign currencies was stable, being a supporting factor to controlling inflationary pressures at home and increasing the certainty in foreign trade relations. 2. Inflation and monetary policy  In 2011, average annual consumer price inflation was 3.5%, remaining close to the previous year’s average inflation rate. The performance of inflation was featured by a high volatility in the past year. Over the first and second quarters, annual inflation rate approached the upper limit of the targeted band, mainly driven by rapid and sharp price rise for food and primary commodities in international markets. These pressures were short-term and soon moderated; over the second half of the year, inflation started to fall gradually, marking 1.7% in December.
I should also stress that no formal decisions have yet been taken in this respect. As you probably know, the Committee will meet next month for the first time since the comment period closed. I can assure you that we will continue to do our utmost to ensure that you - the industry - can take advantage of the benefits of the new Accord at the earliest possible opportunity. Thank you for your attention. BIS Review 42/2003  5