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Dec 21, 2017 12:00 EEST
TIRANA (Albania), December 21 (SeeNews) – Albania's central bank said it decided to keep its key rate unchanged at record low 1.25%.
The interest rate corridor in the interbank money market, set at 0.25% for the overnight deposit interest rate and at 2.25% for the overnight lending rate, will also be kept unchanged, Bank of Albania said in a statement following the last meeting for 2017 of its rate-setting Supervisory Council on Wednesday.
The central bank last changed its key interest rate in May 2016, lowering it by 25 basis points to 1.25%.
Economic activity in Albania continued to expand in the third and fourth quarters of 2017, although some indirect indicators suggest a slight slowdown in the second half of the year, central bank governor Gent Sejko told a news conference.
“Our projections point to a further improvement of economic activity in the medium-term horizon,” governor Sejko said, adding that the expansion of the economic activity will enable a further increase in employment and will contribute to faster growth in wages and production costs.
Sejko added that the further decline in the NPL ratio, which recorded 14.3% in November, shows that the balance sheets of the banking system are improving and that the credit risk is trending downward.
“In parallel to domestic pressures build up, inflationary pressures in the global economy are expected to increase in the medium-term horizon, whereas the strong decelerating effect of the exchange rate is expected to diminish.”
Based on these indicators, Sejko confirmed the central bank expects inflation to return to the bank's target of 3% in the first half of 2019.
“Economic growth has reflected the favourable financial environment, improvement of confidence, impulses generated by increasing employment and high levels of foreign direct investments, as well as the positive momentum in the economies of our trading partners,” Sejko added.
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