The Bank of Albania held its base interest rate at 2.5%, judging the current stance appropriate as inflation is expected to rise moderately and temporarily over the next two quarters while economic activity continues to grow solidly near potential. The rate has remained at 2.5% in every provided decision since November 2025. The central bank also kept the overnight deposit and lending rates at 1.5% and 3.5%, respectively. Consumer inflation averaged 3.3% in July-August, above the 3% target, and is expected to decline gradually toward target from mid-2027, while the economy grew 3.6% in the second quarter and private-sector credit continued to expand rapidly. Exchange-rate appreciation moderated but did not fully offset stronger imported inflation. Higher global oil, energy, food and other commodity prices, amid intensified geopolitical tensions in the Middle East, have tilted inflation risks upward and medium-term growth risks downward. The Supervisory Council said rising inflation pressures and upside risks strengthen the case for future tightening, with any move dependent on new inflation data, overall price pressures, fiscal policy and exchange-rate developments.
Bank of Albania Holds Base Interest Rate at 2.5%
The Bank of Albania held its base rate at 2.5% and maintained overnight deposit and lending rates at 1.5% and 3.5%, respectively, as inflation averaged 3.3% in July-August and second-quarter growth reached 3.6%. Higher commodity prices and geopolitical tensions have increased inflation risks, strengthening the case for data-dependent future tightening.