- 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 and held the overnight deposit and lending facility rates at 1.5 percent and 3.5 percent, respectively, stating that prevailing economic and monetary conditions justify an unchanged stance as inflation remains subdued and activity continues to expand. The base rate has been steady at 2.5 percent since a 25 bp cut in July 2025. The corridor therefore stays at 1.5–3.5 percent. Consumer price inflation averaged 2.4 percent in January–February 2026, below the 3 percent target, while GDP is estimated to have grown about 3.7 percent in 2025 and private-sector credit rose nearly 14 percent year on year in the first two months of 2026. Low imported inflation, aided by a stronger lek, continues to damp price pressures, though the Council notes that Middle East geopolitical tensions pose upside risks to global energy prices. The Council reiterated that it will monitor conditions closely and stands ready to act should threats to price stability materialise.
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.