The Bank of Albania held its base interest rate at 2.5%, judging the stance appropriate as inflation remains controlled and economic growth stays positive, while inflation is expected to remain slightly above target in the short term before gradually returning to target. The central bank cut the rate by 25 basis points from 2.75% in July 2025 and has held it since. It also maintained the overnight deposit and lending rates at 1.5% and 3.5%, respectively, amid ample financial-market liquidity and low interest rates. Consumer inflation averaged 3.0% in the second quarter, while first-quarter economic growth was 3.7% and private-sector credit expanded 14% year on year in the second quarter. Exchange-rate strengthening partly mitigated the inflationary effects of higher international oil and energy prices. Middle East geopolitical tensions remain a source of uncertainty, tilting medium-term risks upward for inflation and downward for growth. The Supervisory Council said it would monitor new data and respond promptly and forcefully to any material risk to price stability.
Bank of Albania2026-08-05
Bank of Albania Holds Base Interest Rate at 2.5%
The Bank of Albania held its base interest rate at 2.5% and maintained its overnight deposit and lending rates at 1.5% and 3.5%, respectively, as inflation remained controlled and growth positive. Inflation is expected to stay slightly above target in the short term before gradually returning to target, while Middle East tensions pose upside risks to inflation and downside risks to growth.