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Sep 26, 2007 17:23 EEST
September 26 (SeeNews) - Albania's central bank on Wednesday raised its key repo rate by 0.25 percentage points to 6.0% due to the higher than expected inflation in August and growing prices of energy imports.
"The increase of the interest rate targets a re-adjustment of the monetary conditions in the economy bringing them in line with the objective of keeping price stability in the next months,” the Bank of Albania governor, Ardian Fullani, said in a statement issued after a regular meeting of the bank's supervisory board.
Albania’s August consumer price index (CPI) rose by 1.9% month-on-month and was 4.2% higher on the year. The country targets an average annual inflation rate of 3.0% for 2007.
The average annual inflation rate for last year is estimated at 2.36%, compared to 2.4% in 2005.
The increasing energy prices were the second main reason for the bank’s decision, Fullani added.
To meet domestic demand Albania imports electricity from the neighbouring countries. According to latest date of the country’s National Statistics Office (INSTAT), power imports increased by 197% year-on-year to 1,445 GWh through June this year. The energy-starved country will import 1.5 million MWh of electricity, estimated to cost 108.6 million euro, in the second half of this year.
This is the second time this year the central bank raises its repo rate, which it uses in one-week repo deals with commercial banks. In June the bank increased the rate by 0.25 percentage points to 5.75% in an effort to keep inflation in check.
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