- Decision
- Maintain
- Rate change
- 0 bps
- base interest rate
- 2.5%
The Supervisory Council of the Bank of Albania left the base interest rate unchanged at 2.5 percent on 5 November, alongside unaltered standing facility rates, judging the current stance as suitably accommodative amid solid growth and still-low inflation; consumer prices averaged 2.4 percent in the third quarter, below the 3 percent target, and are expected to converge to that goal in the first half of 2026. After trimming the rate by 25 bp in July, the central bank has held it steady at 2.5 percent through subsequent meetings. The July cut continues to filter through to lower lending rates in a liquidity-rich, calm financial market environment. Economic activity expanded by about 3.6 percent in the first half, supported by household consumption, investment and service exports, while average wages surged 9.5 percent, helping sustain demand; private-sector credit grew 14 percent in the third quarter. A stronger lek is containing imported price pressures, and the central bank has intervened to moderate further appreciation. Though trade and geopolitical uncertainties pose downside risks and rapid wage gains could lift inflation, the Council says future moves will remain data-dependent and aligned with fiscal, exchange-rate and external developments.
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.