The Bank of Albania’s Supervisory Council kept the key interest rate at 2.5% on Wednesday. It also kept the overnight deposit rate at 1.5% and the overnight lending rate at 3.5%. Governor Gent Sejko said consumer inflation averaged 3.3% in July-August. He linked the rise to higher global oil, energy and food prices amid increased tensions in the Middle East. However, core and domestic inflation continued to fall.

Meanwhile, the Albanian economy grew 3.6% in the second quarter. Consumption, investment and tourism income supported the expansion. Construction and services led growth. Unemployment fell to a record low of 8.3%, while average wages rose 11.5%. Sejko said labour shortages and rapid wage growth could create inflation risks.

Credit also continued to expand. Private-sector lending grew 15.4% year-on-year in July-August, supporting housing purchases, business activity and consumption. At the same time, the ratio of non-performing loans fell to 3.7%, its lowest level since the global financial crisis. The Bank of Albania expects the economy to maintain its positive trajectory. It also expects inflation to rise slightly over the next two quarters before gradually returning towards its target by mid-2027. The Bank kept its policy options open for future adjustments.

/a.p./