Albania Interest Rates Held Steady

The Bank of Albania left its key policy rate unchanged at 2.5% during its May 2026 meeting. The central bank also kept the overnight deposit rate at 1.5% and the overnight lending rate at 3.5%. Inflation in Albania accelerated to 2.6% in March, the highest level since February 2024, although it remained below the central bank’s 3% target. The increase was largely driven by higher energy and transport costs linked to geopolitical tensions. Policymakers said rising oil and energy prices in global markets are expected to cause a slight and temporary increase in inflation above target during 2026, while also leading to a marginal slowdown in domestic economic growth. Still, policymakers expect the effects of the shock to be temporary and not to leave lasting marks on the country’s long-term development trends. However, the Bank of Albania stressed that uncertainty surrounding the outlook remains elevated and that the balance of risks to inflation is tilted to the upside.

The Bank of Albania kept its policy rate unchanged at 2.5% on March 2026, marking the fifth consecutive pause. The overnight lending and deposit rates were also held steady at 3.5% and 1.5%, respectively. Consumer price inflation averaged 2.4% in January and February, below the target of 3%, with inflationary pressures contained in rent prices. The economy expanded 3.7% over the past year, supported by growth in household spending, private investment and export of services. The unemployment rate in Q4 2025 stood at 8.3%, remaining close to its historical lows. However, the labor market remains under tension, driven by high demand in business and weak supply of workers. The Council stated overall developments in recent months have been in line with expectations and reflect a positive growth trend. However, it also highlighted rising uncertainty stemming from ongoing geopolitical tensions, warning that potential supply shocks could pose risks to inflation and future economic growth.

The Bank of Albania kept its policy rate unchanged at 2.5% on December 17, marking the fourth consecutive meeting pause. The overnight lending and deposit rates were also held steady at 3.5% and 1.5%, respectively. The economy maintained steady growth in the second half of 2025, driven by robust consumption, investment, and service exports, with tourism as a notable contributor. Inflation remained well-contained, with the CPI averaging 2.2% in October–November, slightly below third-quarter levels, as food, energy, and housing price pressures eased, while core inflation held steady at 3.1–3.5%. Unemployment rate eased to a one-year low of 8.1% in Q3 2025. Looking ahead, inflation is expected to return to the 3% target by Q2 2026, with risks broadly balanced between potential upward pressures from geopolitical tensions and downside risks from slower growth among key trading partners.