TIRANA, June 7
The Supervisory Council of the Bank of Albania (BoA) decided in an unexpected meeting to cut the key rate to the record low of 1 percent. BoA’s governor Gent Sejko said in a press conference on Wednesday that the Supervisory Council focused on the analysis of the rapid appreciation of the exchange rate, its expected implications for the inflation outlook in the medium-term horizon, and the assessment of the current monetary policy stance.
“However, the performance of the exchange rate in May showed a faster and further appreciation, exceeding the appreciation trend noted in the two previous years. Such expectations spring from information for an increase in foreign currency supply, mainly in response to the capital conversion of some banks, disbursement of a loan in foreign currency to a public company, and expectations for a good tourism season. As a result, the expectations have led to both an increase in supply and a decrease in demand for foreign currency,” Sejko said.
He added that BoA’s judgment on the situation and the economic and financial outlook in Albania has not changed. The development trend is expected to be positive, characterized by further economic growth, gradual convergence of the economy towards the equilibrium, and progressive build-up of domestic inflationary pressures.
Moreover, Sejko added that based on the need for creating adequate monetary conditions for maintaining price stability and reflecting the reduction of scope for using the conventional monetary policy tool, the policy rate, the Supervisory Council decided the undertaking of foreign-currency purchase operations in the domestic foreign currency market.
News Source/Photo Credit: BoA