FX.co ★ Albania Holds Policy Rate at 2.5%

The Bank of Albania maintained its policy interest rate at 2.5% on October 1, marking the second month in a row without a change. The overnight lending rate continues at 3.5%, while the deposit rate remains at 1.5%. The country's GDP experienced a 3.5% year-on-year growth in the second quarter, a minor decrease from 3.7% in the first quarter. This growth was driven by strong domestic demand, increased investment, and a flourishing tourism sector, despite the negative impact of weakened exports and increased imports. Inflation reached 2.4% in July and August, a slight uptick from 2.3% in the prior quarter, attributed mainly to higher rents and stable oil prices. Labor market conditions are robust, with employment rising by 3.4%, private sector wages increasing by 9.5%, and the unemployment rate standing at 8.5%. Economic support persists through credit growth of 14%, a low incidence of non-performing loans, and a varied loan structure. The central bank noted that domestic inflationary pressures are moderate, imported pressures are low, and financial conditions remain favorable. However, they cautioned that external uncertainties and fluctuating commodity prices necessitate vigilance.