PRESS RELEASE
Meeting of the Supervisory Council of June 18, 2004.

The Supervisory Council of the Bank of Albania, in the meeting of June 18th, 2004, after reviewing some of the department's proposals, decided to adopt:

1. The monthly report of the monetary policy.

The annual inflation of May decreased at 2.6 per cent, resulting within the target of the Bank of Albania. The average annual inflation rate was 3.19 per cent. The inflation decrease of May was a result of the early presentation of the domestic agricultural production in the marked compared with the previous year. The decreasing review of some of the administered prices also has had an impact on the decrease of the inflation.

Bank of Albania has facilitated the monetary conditions in April and May. It has decreased at 0.5 percentage points the core interest rate. The facilitation of the monetary policy was a result of the positive expectations on the inflation for the future, aiming to better support both the economy lending and the economic activity of the country. The commercial banks have reacted in the same direction of the decrease of the core interest rate. During the months May - June they have decreased the interest rates of Lek time deposits as well as the T-Bills Yields.

The slowing of the annual rate of M2 aggregate increase, that has reflected a lower demand of both the Government and of the economy on Lek monetary assets, has had impact on the rhythm decrease of the monetary supply increase in April. Foreign deposits have moved to an opposite direction. Their contribution on the increase of monetary supply has resulted to be higher.

Credit balance increased at Lek 2.6 billion in April, being almost at the same level with its increase during the first quarter. It was accorded, in April, Lek 10.6 billion new credit or 54 per cent more in comparison with the same month of the previous year. Liquidity in April and May was at stable levels. It has reflected the moderated increase of Lek deposits and the low demand for government funds. Lek is under favorable positions against both Euro and USD currencies, being supported by the decrease of import as well as the low levels of inflation.

The Supervisory Council discussed also some materials regarding the organization and administration of the work in the Bank of Albania.