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Albania's c-bank holds key rate unchanged at 0.5%

Albania's c-bank holds key rate unchanged at 0.5% Albanian Central Bank building; Author: Enrique Íñiguez Rodríguez; License: CC BY-SA 3.0, via Wikimedia Commons

TIRANA (Albania), October 7 (SeeNews) - Albania's central bank decided to hold its key interest rate unchanged at 0.5% as it sees the current monetary policy stance as adequate based on expectations for higher inflation, central bank governor Gent Sejko said.

The central bank also held the interest rate on the overnight deposit facility at 0.1%, and the rate on the overnight lending facility at 0.9%, Sejko said in a statement on Wednesday.

The central bank's supervisory council also decided to maintain the current liquidity injection auctions with fixed price and unlimited quantity to the banking sector during the last quarter of 2021.

Albania's economic recovery is faster than expected in 2021 as a result of the easing of restrictions, improvement of households and enterprises’ confidence, and the positive effects of economic stimulus, which drove to a broad-base growth of the demand for goods and services. However, temporary supply-demand imbalances in international markets have raised additional shocks on inflation, beyond those dictated by the economic recovery, Sejko said.

"Current projections show a normalisation of the situation in the next year, by suggesting that it will considerably affect the final prices of consumption, but temporary. Nevertheless, central banks, worldwide, continue to be attentive to the performance of energy products and commodities prices."

Albania's central bank cut its policy rate to record low 0.5% from 1.0% in March 2020, aiming to mitigate the impact of the coronavirus pandemic on the country's economic and financial health. The interest rate corridor of the interbank money market was also revised - to 0.9% from 1.9%.