The Bank of Albania kept its key policy rate unchanged at 2.5% at its August meeting, stating that the current monetary stance remains appropriate to support a return of inflation to target. The overnight deposit and lending facility rates were also maintained at 1.5% and 3.5%, respectively.
Consumer price inflation averaged 3% in the second quarter, up from the previous quarter and broadly in line with the central bank’s projections. The increase was mainly driven by higher transportation costs and rising prices for unprocessed food.
Economic growth continued to be underpinned by robust household consumption and solid business investment, while fiscal policy stayed on a consolidating trajectory. The Bank of Albania expects inflation to hover slightly above target in the near term before gradually converging back to target.
The central bank highlighted that elevated uncertainty stemming from the conflict in the Middle East remains a key risk, with the potential to push inflation higher and dampen economic activity. It reaffirmed that future policy decisions will be guided by the objective of preserving price stability.
