TIRANA, July 4 /ATA/- The Supervisory Council of the Bank of Albania reviewed and approved the Intermediary Monetary Policy Report.
In conclusion to the discussions on the economic and monetary developments and the expected outlook, the Supervisory Council decided to:
keep the monetary policy rate unchanged at 1.00%
keep the interest rate for the overnight deposit facility unchanged, at 0.10%
keep the interest rate for the overnight lending facility unchanged at 1.90%
In a press release, BoA writes that the Supervisory Council deemed it necessary to continue the intervention program in the domestic foreign exchange market, as an instrument to restrain the appreciating pressures of the exchange rate with view to meeting the price stability goal.
Based on the current development trends and their underlying factors, the Bank of Albania expects further growth of economic activity and a better utilisation of production capacities in the medium-term horizon. These developments will contribute to a faster increase in wages and production costs, enabling the return of inflation to target within 2020.
The updated forecasts did not bring about considerable changes in the expected trajectories of future developments. The baseline scenario suggests that the Albanian economy will continue to grow, driving the build-up of domestic inflationary pressures. The appreciated exchange rate will tend to decelerate inflation over the next quarters, but the effect of this factor is expected to be transitional.
Therefore, inflation is expected to steadily return to its target within 2020.
In line with our forecasts for the outlook and the risk balance surrounding them, the Supervisory Council judges that the return of the policy rate into an upward trajectory will not begin before 2019 Q2.
/e.xh/. j.p/sm/
