Albania‘s central bank kept its benchmark interest rate at a record low of 2.25 percent on Thursday and forecast policy would stay focused on boosting economic growth well into next year. “The Supervisory Board thinks the current position of monetary policy and financial conditions support the return of economic growth to its potential and the inflation to its target over the medium term,” the bank said in a statement.
“Looking at the forecasts of our basic scenario, we think that reaching the inflation target over the medium term will require us to maintain stimulating monetary conditions even for some quarters,” the bank added. The bank cut the benchmark rate by a quarter of a percentage point in November, the third such reduction this year, bringing the rate to its lowest ever in an effort to spur demand and lending and help sluggish growth.
Year-on-year inflation in November was 1.7 percent, below the lower end of the 2 to 4 percent band, or around 3 percent, that the central bank was targeting for end-2014. “Inflation is expected to rise gradually over the next months, but the overall balance of inflationary pressures remains weak,” the bank said.
The bank said its forecasts suggested growth for the Albanian economy in 2014 and over the medium term. Albania’s gross domestic product grew just 1.39 percent in real terms in 2013, preliminary figures showed, and the lowest rate growth in a decade and a half. Albania and the International Monetary Fund expect GDP growth of about 2 percent in 2014.
News source/photo credits: ATA