C-bank to adopt new policy for lower interest rates

TIRANA, June 21 – Central bank governor Ardian Fullani has announced the need to undertake a new policy that would lower loan interest rates offered by commercial banks following failure to achieve this by lowering the key interest rate.
Speaking in a forum with heads of commercial banks this week, the governor said the “central bank is expected to undertake an important step on the market to make interest rates applied by central banks as realistic as possible.”
“The interest rates will serve to determine fees of banking products. The target of interest rate in the short term is orientation towards basic rates set by the central,” said the governor of the Bank of Albania.
High interest rates, especially for loans but even bank commissions are the main problem which the country’s financial market faxes.
The governor warned that the economy cannot develop without open and well-regulated markets, identifying the development of the inter-banking market as a great challenge.
“The development of this market directly serves to the well-being of citizens and that’s why the Bank of Albania has taken measures to develop the money market through banks, maintaining clear and continuous communication with private operators.”
Earlier this year, the central bank called on second-tier banks to increase their transparency to customers, informing them on the cost of services they offer because of numerous complaints of high fees. Governor Fullani said he was unsatisfied with the effects some regulations issued by the central bank have produced and that the banks’ method of calculating services remained unclear.
Meanwhile, the supervisory council of the Bank of Albania is expected to hold its next meeting on monetary policy at the end of this month. Experts predict the bank will lower the key interest rate following continuous requests by government.
A further cut in the interest rate, currently at 5.25 percent, unchanged during this year, would revive lending and ease government bonds.
The central bank lowered the key interest rate by 0.5 percentage twice in January and October 2009 but has kept it unchanged since then fearing the depreciation of the national currency and inflation rate.