The Committee had to set out how it thought about the world, first of all for itself, and then for the outside world. You can still see evidence of all this activity on the Bank’s website – in speeches describing how the MPC saw the world, and in books which set out the MPC’s models of the economy. But the world does not stand still. Over the last decade, the Committee, and the Bank staff who support it, have had to confront some enormous changes in the economic environment. The Committee’s thinking has had to evolve to meet this challenge. Without going into detail – that would require another speech – let me give you a flavour of some of the questions with which we have been grappling during my own time on the Committee alone. First, we have had to understand the implications of some very big movements in asset prices, both domestically and globally. House prices have risen steadily, tripling since 1997, to reach record levels relative to household incomes and rents. Share prices soared in the run up to the millennium, then slumped, but have subsequently recovered. There has been a long running debate among central bankers about how they should respond to asset price booms – and possible busts – with some arguing that there is a case for taking pre-emptive action, over and above what might be warranted to meet the inflation target over the normal two to three year horizon.
Gent Sejko: Overview of Albania’s latest monetary and economic developments and outlook Speech by Mr Gent Sejko, Governor of the Bank of Albania, on the Monetary Policy Decision of the Bank of Albania’s Supervisory Council, Tirana, 4 March 2015. *  *  *  Today, on the 4 of March 2015, the Supervisory Council of the Bank of Albania reviewed and approved the Interim Monetary Policy Report. After scrutinising the current and expected performance of inflation and other economic indicators, the Supervisory Council of the Bank of Albania decided to keep the key interest rate unchanged at 2.0%. *** The domestic and external economic environment has generated low inflationary pressures. According to INSTAT data, annual inflation was 1.3% in January, up from the rate registered in December. Inflation fluctuations in the last two months have been determined mainly by the volatility in food prices. The fall in food inflation in December and its rise in January were driven by developments in international markets and the performance of domestic production. In parallel, the decline in oil prices has generated downward pressure on inflation. Prices of other consumer goods’ categories did not display any significant change. The rise in inflation in January was in line with our projections; however, the rate of inflation remains below Bank of Albania’s target. The Bank of Albania evaluates that inflationary pressures will increase gradually and inflation will return to target within the medium term.