The Bank of Albania held its base interest rate at 2.5%, judging an unchanged stance appropriate amid solid growth, rising external inflation pressures and mounting uncertainty. The rate has remained at that level since November 2025. The central bank also kept overnight deposit and lending rates unchanged at 1.5% and 3.5%, respectively. Inflation eased to 2.9% in September as rent inflation slowed, but is projected to rise slightly above the 3% target in the short term before returning to target during 2028. The economy expanded 3.6% in the first half of 2026, with growth expected to remain close to potential over the medium term, while the non-performing loan ratio remained historically low. The lek continued to appreciate, partially cushioning the impact of higher foreign prices. Rising oil and other energy prices drove broader international inflationary pressures. With risks tilted towards higher inflation and weaker growth, the central bank acknowledged a possible need for future policy normalisation but stressed a cautious, flexible approach, with decisions dependent on incoming information and risks to a sustained return of inflation to target.
Bank of Albania Holds Base Interest Rate at 2.5%
The Bank of Albania held its base interest rate at 2.5% amid solid growth, rising external inflation pressures and mounting uncertainty. Inflation eased to 2.9% in September but is projected to rise slightly above the 3% target in the short term before returning to target during 2028.