- Decision
- Maintain
- Rate change
- 0 bps
- base interest rate
- 2.5%
The Supervisory Council of the Bank of Albania left the base rate at 2.5 percent, judging the current stance sufficient to support solid growth while guiding inflation back to target during 2026 amid heightened geopolitical risks. After a 25 bp cut in July 2025 the rate has been held steady. The overnight deposit and lending facility rates remain at 1.5 percent and 3.5 percent, keeping liquidity conditions easy. Consumer-price inflation averaged 2.4 percent in January–February, still below the 3 percent target, while GDP is estimated to have expanded by about 3.7 percent in 2025; credit to the private sector grew nearly 14 percent in the first two months of 2026 against a backdrop of ample liquidity and historically low unemployment of 8.3 percent. A stronger lek and muted imported inflation continue to offset domestic price pressures, aided by rising tourism receipts. The Council highlighted the surge in global oil prices linked to the Middle-East conflict as a key external risk and pledged to react “in a timely, appropriate and forceful manner” should supply shocks threaten price stability.
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.