TIRANA (Albania), February 8 (SeeNews) – Albania's central bank said it will keep its key rate unchanged at a record low 1.25%.
The interest rate corridor in the interbank money market will also be kept unchanged, set at 0.25% for the overnight deposit interest rate and at 2.25% for the overnight lending rate, Bank of Albania said in a statement following the first meeting for 2018 of its rate-setting Supervisory Council late on Wednesday.
The central bank last changed its key interest rate in May 2016, lowering it by 25 basis points to 1.25%.
“The new information analysed by the Supervisory Council resulted, overall, is in line with our expectations. Similarly, our forecasts on the economic and monetary outlook have remained largely unchanged,” central bank governor Gent Sejko said in a news conference.
Sejko added that the Albanian economy continued to grow in the second half of 2017, albeit at a slower pace than in the first half.
According to Sejko, the monetary policy of the bank has played a significant role in sustaining the upward trend of the economy and building up domestic pressures on inflation.
Based on the bank’s projections, the economy will continue to grow over the medium-term horizon, underpinned by the improvement in the external environment and the favourable financing conditions at home.
“Albeit upward, domestic inflation remains subdued and below the 3% target of the Bank of Albania. In the macroeconomic aspect, this performance reflects the cyclical development stage of the Albanian economy and subdued imported inflation rates,” Sekjo added.
He also reconfirmed that the intensity of the monetary stimulus will continue until the fourth quarter of 2018, adding that the monetary policy is expected to remain accommodative over the medium-term horizon in order to ensure a sustainable convergence of inflation with the target.
“The further acceleration of the economic growth pace requires a rigorous continuation of structural reforms,” Sejko said, adding that the balance of risks to bank’s projections remains on the down side.