Albania’s c-bank cuts policy rate to 3%

Non-harmonized inflation eased to 2.1% on average in April and May as a rise in food prices was notably reduced, mainly due to a slowdown of inflation in imported foods, central bank governor Gent Sejko said in a statement.

The rise in the prices of other items in the consumer basket was steady in the second quarter as internal inflationary pressures remained stable due to increasing demand supported by wage hikes.

In the first quarter, non-harmonized inflation averaged 2.7%.

Preliminary data indicates sustained economic growth during the second quarter, supported by increased consumption, private investments, service exports, and a continued growth of the tourism sector, Bank of Albania said. On the downside, exports of goods declined.

The central bank also cut the interest rate on the overnight lending facility to 4% from 4.25% and the rate on the overnight deposit facility to 2% from 2.25%.

Albania's EU-harmonised index of consumer prices (HICP) rose 2.5% year-on-year in May, slightly accelerating from a 2.3% annual increase in April, the statistical office, INSTAT, said earlier this month.

Bank of Albania increased its key rate six times in 2023 - in March, July, August, October and November, and has held it at 3.25% until Wednesday.