TIRANA, Aug. 5 /ATA/ – The Bank of Albania kept its benchmark interest rate unchanged at 2.5% on Wednesday, saying the current monetary policy stance remains appropriate to safeguard price stability while supporting economic growth.
The decision was taken by the central bank’s Supervisory Council following a review of its quarterly monetary policy report.
Governor Gent Sejko said the Albanian economy continued to post positive growth in the second quarter despite a challenging external environment.
Economic activity expanded at a solid pace, although somewhat slower than in the first quarter, while inflation increased due to higher international oil and energy prices and resilient domestic demand, Sejko said. He added that inflation remained under control and close to the central bank’s target.
According to central bank data, average consumer price inflation reached 3% in the second quarter. Economic growth continued to be supported by household consumption, investment, exports, tourism revenues and favourable monetary and financial conditions.
The governor said Albania’s banking sector remained sound, with financial markets characterised by ample liquidity and relatively low borrowing costs. Private-sector lending continued to grow strongly, with the loan portfolio expanding by 14% year-on-year in the second quarter, driven mainly by business investment financing and housing loans to households.
The central bank said the outlook for the Albanian economy remains positive, with growth expected to continue near its potential rate. Inflation is projected to remain slightly above target in the short term before gradually converging toward the target over the medium term.
However, the Bank of Albania warned that geopolitical tensions in the Middle East continue to pose risks to both the global and domestic economy, maintaining upward pressure on inflation and creating uncertainty for future growth prospects.
In addition to leaving the benchmark rate unchanged at 2.5%, the Supervisory Council also kept the overnight deposit rate at 1.5% and the overnight lending rate at 3.5%.
The central bank said it would continue to closely monitor economic and inflation developments and stands ready to use its monetary policy tools if necessary to preserve price stability.
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