PRESS RELEASE
Governor Sejko attends the Conference on “Is inflation back, and in which form?”, in Geneva

On 22-23 September 2022, the Governor of the Bank of Albania, Mr Gent Sejko, attended the International Conference on: “Is inflation back, and in which form?”, organised at the Graduate Institute of International and Development Studies, in Geneva, Switzerland.

The conference, organised for the 10th year in a raw, in the framework of the BBC (Bilateral Assistance & Capacity Building for Central Banks) programme [1] funded by SECO, aims the sharing of experiences and knowledge among participants, who represent the central banks in partner countries of this programme.

High-level representatives from the central banks of: Azerbaijan, Bosnia and Herzegovina, Columbia, Morocco, Peru, Tunisia, Ukraine and Albania; as well as from other international financial institutions and academia attended this Conference.

Discussions focused on issues, such as: the change in inflation performance; the role of central banks in preserving price stability; the impact of Ukraine conflict on the supply chains in the economy. In addition, the challenges faced by central banks in tackling these new situations were also addressed in this Conference. 

Central banks, up to 2021, have been meticulously working on keeping inflation at an averagely high level. Disruptions in supply chains and consumption structure, due to the situation arising from the pandemic, coupled with the impact from the conflict in Ukraine on the prices of goods, have driven to the highest upsurge in inflation, in the last three decades.

Against this backdrop, the main task of central banks - to maintain price stability - has taken an enhanced attention, and in this context, preserving their reliability is related to their ability to keep inflation under control.

In this Conference, Governor Sejko was invited to share the views in the panel on “How global is inflation?”

In his address, the Governor stated that the current high inflation rate is a global phenomenon, as the factors, risks and challenges are similar across all countries.

In the beginning of his address, Mr Sejko pointed out that the advanced globalisation has intensified the impact of supply chain disruptions, like the ones experienced recently, particularly in terms of oil, gas and energy. This environment of high inflation - a consequence of globalisation- is fuelled also by the accumulated savings during the lock down due to the pandemic, while the Russia - Ukraine war heightened the instability, uncertainty and decreased the supply.

Next, Governor Sejko presented an overview of developments in the Albanian economy. The economy recovered swiftly from the negative shock arisen from the disruptions and economic restrictions related to the pandemic, in place in Albania and globally.  While, the Russia - Ukraine war changed fundamentally the expectations of the Bank of Albania and the economic prospects, and drove inflation climbing from 0.9% in 2021 Q3, to above our 3.1% target at the end of 2021 Q4.

The Bank of Albania has reacted through monetary policy, by increasing the policy rate three times in 2022, from the lowest level of 0.5% in February 2022 to 1.75% in August 2022, to orientate inflationary expectations and ensure inflation converge towards the target within a medium term horizon.

Next, Governor Sejko emphasised that the monetary policy of the Bank of Albania has been and will continue to be guided by three principles:

• First, the Bank of Albania remains devoted to undertake any action required for safeguarding inflation stability.
• Second, the Bank of Albania, without jeopardising the price stability, will try to avoid the unnecessary monetary shocks of economic activity. The latter calls for a prudential analysis of price trends by considering the transmission mechanism lag of monetary policy.
• Third, the Bank of Albania will try to coordinate the monetary policy with fiscal policy.

Concluding, Governor Sejko highlighted that the Bank of Albania will continue to be attentive to the soundness of the banking and financial system, while focusing on banking supervision and committed in undertaking proactive policies.

[1] BCC programme provides technical supports to central banks in emerging countries. The BBC programme, funded by Swiss State Secretariat for Economic Affairs (SECO) and implemented by The Graduate Institute, Geneva. The aim of this programme is to support partner central banks in emerging countries, in building the analytical and technical expertise to conduct effective monetary policy, promote stable and efficient financial sector, and be more operationally sustainable.