TIRANA, March 25 – Albania’s central bank sharply increased liquidity injection in the final quarter of 2014 as part of its easier monetary policy targeting to keep inflation rate within its 3 percent target and stimulate credit and consumption through lower interest rates in the national currency.
In a report on the money market interventions, the Bank of Albania says it injected an average of 28.21 billion lek (€197 million) in the final quarter of 2014, up 76 percent compared to the end of 2013, with the overwhelming majority in one-week repos.
The central bank said it used its key instrument, the one-week repo at an average of 23.68 billion lek (€165.7 mln) a week, along with the one-month reverse repo at an average of 2.45 billion lek (€17 mln) a week and used the three-month repo twice at an average of 1.85 billion lek (€13 mln) per auction.
The central bank also used one-day deposits in 35 cases to regulate daily liquidity at an average of 5.39 billion lek (€37.7 mln), compared to 27 cases at average of 2.07 billion lek (€14.5) in the third quarter of 2014.
The central bank also continued foreign currency operations with the Finance Ministry mainly under swap contracts.
The Bank of Albania also bought 345 million lek of foreign currency from the International Development Agency (IDA) and the International Bank for Reconstruction and Development (IBRD), two financial institutions part of the World Bank.
Bank of Albania governor Gent Sejko has pledged to continue the central bank’s easier monetary policy in consultation with partner international financial institutions
“I think that even though the key interest rate has been cut to a historic low, there is still space and it should be assessed in cooperation with the IMF whether other means could be employed such as the quantitative easing or the injection of liquidity into the market, which would be a new element on the Albanian market,” said Sejko.
The new governor hopes the European Central Bank’s massive quantitative easing boost for the eurozone will also have an impact on Albania’s commercial banks, the overwhelming majority of which are EU subsidiaries.
The ECB has announced it will inject at least Euro 1.1 trillion into the ailing eurozone economy until September 2016 as part of quantitative easing program which encourages borrowing and spending through low interest rates.
“We hope mother-banks will increase interest on lending in Albania,” said Sejko.
