Skopje, 28 October 2022

Central banks are consistent in maintaining price stability

The continued inflation growth is a phenomenon present in almost all economies worldwide, which increases inflationary expectations and creates risks to price stability. The situation in the Western Balkans is similar, which is why all central banks have already started the cycle of monetary tightening through adequate liquidity management, interest rate increases, and other instruments, depending on the available monetary strategies. Supply-based inflation growth and increasingly pronounced adverse risks to demand require that central banks’ steps are careful and gradual. This will reduce the damage to economies, whose growth is already slowing down amid high risks of the war in Ukraine and the energy crisis, and protect financial stability against greater risks. In any case, central banks continue with monetary tightening to maintain price stability. This was indicated by the National Bank Governor, Anita Angelovska Bezhoska, who together with the National Bank Vice Governor, Fadil Bajrami, took part in the Annual Conference organized by the Bank of Albania and the London School of Economics and Political Sciences. 

Governor Anelovska Bezhoska took part in the panel discussion The fight against inflation in the developing countries in Europe, which was also attended by the governor of Albania, Gent Sejko, the member of the Council of the National Bank of Romania, Csaba Balint, and the deputy governor of the National Bank of Hungary, Barnabas Virag. The participants shared experiences about managing the persistent inflation growth and the approach regarding policy normalization. Future challenges for central banks in the region and their response with optimal policy mix to achieve the goals were also discussed.

"Coordination of monetary and fiscal policies is always a prerequisite for stability and prosperity, and it is especially needed in times of crisis. Faced with the energy crisis and the war in Ukraine, the fiscal and monetary authorities are expected to once again contribute to overcoming the adverse effects on the economy. And as monetary policy provided support for fiscal measures during the pandemic, in these new crisis circumstances, fiscal measures should provide support for dealing with price pressures. Moreover, targeted support is needed for the most vulnerable categories, taking into account fiscal sustainability, especially in the context of the rise in domestic interest rates and interest rates on international markets", said Angelovska Bezhoska in her address.

This year’s Conference Inflation is back: How to Deal with It under Heightened Uncertainties?, consisted of three sessions on the nature of the underlying causes of the current inflation rise and options for policy normalization, while keeping in mind the differences between advanced economies and developing economies. Specific challenges for the monetary policy, economic and financial stability of the countries in the region were also emphasized.