The strengthening of the lek "softened" inflation from abroad - Themeli: The Bank of Albania expects a slight increase in prices in the coming months
The exchange rate, i.e. the strengthening of the lek and the depreciation of the euro, have made it possible for the increase in prices abroad to not be transmitted as much to the Albanian economy. This was stated by the Director of Monetary Policy at the Bank of Albania, who emphasized that fiscal policy has also influenced the reduction of inflation from abroad.
"I would like to emphasize two more findings that were made by the Supervisory Council, the fact that the continuous strengthening of the exchange rate continues to help reduce the transmission of foreign inflation to Albanian markets and also the fact that the consolidation direction of fiscal policy exerts a restraining influence on inflation, so overall, the entire macroeconomic context, monetary policy, exchange rate developments and fiscal policy were deemed appropriate for maintaining inflation in the future," said Themeli.
The increase in oil prices in international markets contributed to the increase in inflation from 2.5% in the first quarter to 3% in the second quarter, but it continues to remain within the Bank of Albania's target. According to him, prices will increase even more in the future.
"The Bank of Albania expects that in the medium term, inflation will remain close to the Bank of Albania's target of 3%. We expect an inflation level somewhat higher than our target in the short term, in the remaining two quarters of 2026 and the first two quarters of 2027, but in any case not a significant deviation from the target and further, starting from 2027, we expect a gradual and progressive decline in inflation to the target" , emphasized the Director of Monetary Policy.
Meanwhile, the base interest rate, which is considered to be the lowest in the region and compared to the European Central Bank's base interest rate, has led to rapid lending growth.
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