Albania Leaves Key Rate Unchanged

The Bank of Albania kpet its benchmark rate unchanged at 2.5% at its October 2026 meeting, as policymakers stated that the current monetary stance remains appropriate to support inflation's return to target. Inflation averaged 3.3% in July-August, driven by higher fuel and unprocessed food prices, as global commodity costs rose amid heightened geopolitical tensions in the Middle East. Meanwhile, core and domestic inflation eased, although tight labor market conditions and rapid wage growth continued to pose upside risks over the medium-term. Economic activity remained solid, expanding 3.6% year-on-year in Q2, supported by consumption and investment. The central bank expects inflation to rise moderately over the next two quarters before gradually returning toward target over the medium term. Future policy decisions will depend on incoming inflation data, fiscal policy and exchange-rate developments.

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.