Albania keeps interest rate unchanged as inflation declines
The Bank of Albania has maintained the base interest rate at 2.75%, citing ongoing economic growth, higher employment, and declining inflation. In a press conference, Governor Gent Sejko emphasized that despite the positive outlook, rising global trade tensions—partly influenced by recent policies from U.S. President Donald Trump—pose a risk to economic stability.
Why is this important: Economic growth in Albania has led to increased employment, higher wages, and improved business revenues, all of which have enhanced the financial position of both households and enterprises. Lower inflation has strengthened purchasing power and encouraged private investment. Maintaining a stable interest rate supports continued growth, but rising geopolitical tensions could impact global and regional economic conditions, making prudent monetary policy essential.
Context: Governor Sejko noted that economic forecasts have become more uncertain due to heightened risks in the global environment. He pointed to ongoing geopolitical tensions and uncertainties regarding international trade policies, which may have significant implications for both the global and European economies.
The Supervisory Council of the Bank of Albania has decided to leave the base interest rate unchanged at 2.75%. The council will continue to monitor new data and adjust monetary policy based on developments in domestic inflationary pressures.
Sejko also announced measures to reduce the cost of consumer loans and improve transparency for financial services. Regulatory changes will lower interest rates and fees on loans issued by both banking and non-banking institutions. The goal is to reduce borrowing costs and enhance consumer protection in financial markets.
Additionally, Sejko addressed currency fluctuations, particularly the recent rise of the euro to 100 lekë. He attributed these fluctuations partly to increased government spending. To stabilize the exchange rate, the Bank of Albania purchased €1 billion last year to strengthen its foreign currency reserves.
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