TIRANA, Sept. 2 – Albania’s central bank has decided to keep the key interest rate unchanged at a historic low of 2 percent for the eighth month in a row and says that it will continue applying an easy monetary policy until the first half of 2016.
The measure is aimed at boosting consumption and lending already at sluggish growth rates by discouraging investments in deposits through lower interest rates at a time when inflation rate remains significantly below the central bank’s 3 percent target.
“Based on assessments and forecasts by the Bank of Albania, the Supervisory Council estimates that the monetary stimulus will not weaken at least even during the first half of 2016,” said central bank governor Gent Sejko.
Albania’s central bank has kept the key interest rate at a historic low of 2 percent since late January 2015 after 13 consecutive slashes by 0.25 percentage points since August 2011, when the key rate was at 5.25 percent.
With the key interest rate standing at a historic low of 2 percent since late January 2015, the easier monetary policy the central bank has been following since Sept. 2011 when the key rate was at 5 percent, has mostly been mostly reflected on lower interest rates on deposits rather than loans in the national currency. While savings by households have considerably been discouraged as interest rates stand below average inflation rates, lower interest rates on lek-denominated loans have failed to boost consumption and private investments, two of the country’s key drivers of growth.
