The central bank decided to keep the key interest rate unchanged at 5.25 percent in the last meeting of its Supervisory Council, saying that monetary conditions to keep inflation rate in check in the mid-term period appear suitable
TIRANA, July 4 – The Bank of Albania says the inflation rate, which during the first five months of this year has been up to 4.5 percent exceeding the central bank’s target by 0.5 percent, will return to normal rates by the end of this year.
Central bank governor Ardian Fullani said in a recent press conference that the inflation rate is expected to get back to the central bank’s 3ѱ target band by year-end explaining that “the effect of the shocks of foreign prices will wane while the effect of administered prices will cease in the third quarter.”
According to Fullani, the increase in some administered prices and the increase in the excise tax for some products such as tobacco and medicines are contributing to rising inflation while domestic agricultural production has had a positive impact in the past few months.
Latest data published by the country’s Institute of Statistics show the inflation rate in May 2011 was up 4.2 percent year-on-year, remaining above the Bank of Albania’s 3ѱ target for the fourth consecutive month.
The central bank decided to keep the key interest rate unchanged at 5.25 percent in the last meeting of its Supervisory Council, saying that monetary conditions to keep the inflation rate in check in the mid-term period appear suitable.
Last March, Albania’s central bank decided to raise the repo rate by 0.25 percentage points to 5.25 percent after keeping it unchanged at 5 percent–one of the lowest historic levels– for the past 8 months. Governor Ardian Fullani said the move was aimed at keeping inflation rates in check following a sharp rise in consumer prices.
Speaking of the country’s economic performance, Fullani said the Albanian economy had grown in the first quarter of this year but remained below its potential because of low domestic demand and not enough private investments as consumers’ behavior becomes more conservative and their saving trend increases.
Low investments by the private sector were also reflected in the lending rates which were up 10 to 12 percent in the four months of this year, increasing by an average of 2 percentage points compared to 2010.
