"Inflation is expected to increase slightly above target", BoA keeps key interest rates unchanged
Price increases but also solid economic growth. This is the forecast made by the Supervisory Council of the Bank of Albania for the remaining months of this year. Governor Sejko said that the monetary policy of the Bank of Albania has made a positive contribution. “The Albanian economy is expected to continue to grow at solid rates and close to potential over the coming quarters, while inflation is expected to increase slightly above target in the second half of the year and gradually return to it in the following period. These forecasts continue to be conditioned by the assumption that geopolitical tensions will gradually reduce and oil prices will normalize in the future,” said Governor Sejko.
In the analysis of economic growth, the Governor emphasized that it is being sustained by services at a time when the manufacturing sector is declining. "Its expansion was supported by the growth of household consumption, private investment, as well as exports of goods and services, while fiscal policy maintained its consolidation nature. In terms of sector, economic growth continued to be led by the expansion of activity in the services and construction sectors, while the agricultural and industrial sectors continued to contract. The available information suggests similar growth rates and structure during the second quarter, said Governor Sejko.
According to the governor, financial markets have ample liquidity and that low interest rates are encouraging lending. "The loan portfolio marked an annual growth of 13.8% during May, continuing to show good quality indicators, a gradual increase in the share of loans in Lek, and an orientation towards financing business investment projects and the purchase of housing for families. In this way, the growth of bank credit has continued to support the expansion of consumption and private sector investments, making a positive contribution to economic growth," said Governor Sejko.
Based on market information, the Supervisory Council of the Bank of Albania decided to keep interest rates unchanged.
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