Albania Keeps Key Rate Steady at 2.5%

The Bank of Albania left its key policy rate unchanged at 2.5% at its August meeting, saying the current monetary stance remains appropriate to support inflation's return to target. The overnight deposit and lending rates were also kept at 1.5% and 3.5%, respectively. Consumer inflation averaged 3% in the second quarter, accelerating from the previous quarter and in line with the central bank's expectations, driven by higher transportation and unprocessed food prices. Economic growth continued to be supported by household consumption and business investment, while fiscal policy remained on a consolidating path. Inflation is expected to stay slightly above target in the near term before gradually easing to target. However, uncertainty surrounding the Middle East conflict remains a risk, potentially pushing inflation higher and weighing on economic growth. Future policy decisions will remain focused on preserving price stability.

The Bank of Albania kept its key policy rate unchanged at 2.5% at its June 2026 meeting, maintaining that the current stance supports inflation's return to target. The overnight deposit and overnight lending rates also remained unchanged at 1.5% and 3.5%, respectively. Headline inflation averaged 2.9% in April-May, mainly driven by higher fuel prices, with supply-side pressures also affecting unprocessed food and services. Meanwhile, the economy expanded 3.7% year-on-year in the first quarter of 2026, supported by services and construction, with indicators pointing to continued growth in the first half of the year. The Bank expects inflation to rise further in the near term due to supply shocks before gradually easing over the medium term, while economic growth is projected to remain solid. Future policy decisions will remain focused on preserving price stability and containing persistent inflationary pressures.

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.