TIRANA, August 2 – The Supervisory Council of the Bank of Albania (BoA) decided on Wednesday to keep the base interest rate unchanged at 3 percent. The governor, Gent Sejko, said that the determining factors in the decision not to increase interest rates are the slowdown of inflation, the strengthening of the lek in the exchange rate and the restrictive nature of the fiscal policy.
“The Supervisory Council notes that this decision-making was supported by the positive performance of expected economic developments in the base scenario, by the more neutral risk balance, as well as by the strengthening of the exchange rate and the acceleration of the fiscal consolidation trend during the first half of the year, “said Sejko in a press statement.
However, according to the governor, the Supervisory Council considered that high inflationary pressures from the domestic economy remain a risk factor for price stability in Albania. In this context, he said that BoA was ready to continue the process of normalizing the stance of monetary policy, if this measure is considered necessary to guarantee price stability.
He noted once again that the strengthening of the lek in the exchange rate this year is the result of structural factors and the improvement of the balance of payments. Sejko underlined that the strengthening of the Lek has enabled the Albanian economy to have lower inflation, lower interest rates, continuity of lending to the economy and higher rates of economic growth compared to most countries in the region.
However, he said that the fluctuations of the exchange rate, especially after the month of July, have become stronger, signaling the possibility of the existence of disturbances in the foreign exchange market. In the event that these fluctuations will continue, the Bank of Albania may consider temporary interventions to stabilize the market or increase planned purchases of Euros for foreign exchange reserve needs. According to him, during the first half of 2023, the Bank of Albania has bought 170 million euros in the domestic foreign exchange market, mainly through auctions planned for increasing the reserve. /argumentum.al
