- Decision
- Lower
- Rate change
- 25 bps
- base interest rate
- 2.5%
The Supervisory Council of the Bank of Albania cut the key interest rate by 25 bp to 2.50 percent on 2 July 2025, after reviewing its Interim Monetary Policy Report and discussing recent economic and monetary developments and their expected trajectory. Having kept the rate unchanged at 2.75 percent at its meetings in February, March and May 2025, the Council also lowered the overnight deposit and lending facility rates by 25 bp each, to 1.50 percent and 3.50 percent respectively. No additional macroeconomic assessments or forward guidance were provided in the communiqué.
Rate evolution
From July 2025 to August 2026, the Bank of Albania cut the policy rate by 25 basis points to 2.50% and then left it unchanged, including at its 5 August 2026 meeting. Through May, the pause was framed against economic growth, rising employment and wages, credit expansion and calm financial markets, while inflation stayed below the 3% target despite a mild pickup, as low imported inflation and exchange-rate appreciation offset firmer domestic pressures concentrated in rents.
In November 2025, the Bank judged the stance appropriate because inflation was expected to return to target in the first half of 2026, with risks seen as balanced between downside risks from trade and geopolitical tensions and upside pressure from labour shortages and rapid wage growth. By March 2026, and with the rate unchanged again in May, uncertainty was presented as more acute and externally driven, centered on the Middle East conflict and oil prices, and holding steady was seen as supporting a return to target during 2026 absent strong supply shocks. In August, the Bank judged the stance remained appropriate as second-quarter inflation averaged 3.0%, reflecting higher international oil prices and stable demand, while projections showed inflation slightly above target in the short term before gradually returning towards it and risks remained tilted towards higher inflation and weaker growth.