TIRANA (Albania), March 28 (SeeNews) – Albania's central bank said on Thursday it has decided to keep its key policy rate on hold at record low 1.0%, it said.
The interest rate corridor in the interbank money market will also be kept unchanged, set at 0.10% for the overnight deposit rate and at 1.90% for the overnight lending rate, Bank of Albania said in a statement following a meeting of its rate-setting supervisory council.
The central bank last changed its monetary policy rate in early June 2018, lowering it by 25 basis points to 1.0% amid strong appreciation of the lek currency increasing downside pressures on inflation.
New data obtained over the first two months of the year have been broadly in line with our forecasts, central bank governor Gent Sejko said in the statement.
He said that the expectations for the future have not undergone significant changes, although the risks to the domestic and foreign environment have increased.
“In these circumstances, the Supervisory Council assessed that the current monetary policy stance is appropriate for meeting the Bank of Albania objectives,” Sejko noted.
The economic growth rate seems to have slowed down somewhat over the last two quarters, the governor said, adding that the slowdown reflects the low performance of electricity generation.
The expansion of economic activity is supported by the gradual growth trend of lending to the private sector, the statement noted, adding that lending to private sector marked an annual growth of about 6% during the first two months of 2019.
The ongoing consolidation of the banking sector, as well as the continuous improvement of its balances, creates preconditions for a faster improvement of supply and lending rates in the country, governor Sejko noted.
Growth in consumption, investment and exports will enable further employment growth, the central bank governor said, adding that inflation is expected to converge to the bank’s target in the second half of 2020.