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Central bank keeps key rate at record-low of 3%.

February 2, 2014

The supervisory board of Albania's central bank decided on January 29 to keep the base interest rate unchanged at the historic low of 3% after two consecutive 0.25bps cuts November and December 2013 , the bank informed on its website. Monetary stimulus, transmitted through low interest rates and injecting continuous basis liquidity creates the necessary conditions for meeting the mid-term inflation target, the bank said. Average annual inflation was 1.5% in Q4 2013, remaining unchanged from the previous quarter. The country's inflation rate stood at 1.9% in December 2013 and was determined almost entirely by the dynamics of food prices. Low inflationary pressure has been determined by weak performance of aggregate demand, a drop in imported inflation as well as contained inflation expectations. Private consumption remains muted, reflecting lower consumer confidence and the slowdown in revenue growth. In addition, private investments have extended its downward trend in H2 2013. The central bank projects slight improvement of the performance of local economy over the year ahead. Aggregate demand will continue to be supported by export growth and a better performance of consumption and investment. The bank expects annual inflation to fluctuate within a 0.7% - 3.8% band with a 90% probability. Finally, the central bankers agreed to maintain monetary policy stimulus and intensify the pace of support, in case of a low risk environment.

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Source: IntelliNews - Weekly Reports

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