Thursday, March 29, 2012

Bank of Albania Cuts Interest Rate 25bps to 4.25%

The Bank of Albania dropped its main monetary policy interest rate another 25 basis points to 4.25% from 4.50% previously.  The Bank said [translated]: "the Supervisory Board decided to reduce by 0.25 percentage point interest rate, by deducting the 4.25% level. This decision aims to create appropriate monetary conditions for meeting the inflation target over the medium term. Meanwhile, monetary policy easing provides greater support for development of private sector demand in the economy."

The Bank of Albania has now cut the interest rate three times (including 25 basis points in October, and December) since it previously raised the interest rate by 25 basis points to 5.25% at its March meeting last year.  Albania reported annual inflation of 0.6% in February,  down from 1.7% in December, 3.1% in August, 4.2% in May, and 4.5% earlier in February last year, and now below the Bank's 3% inflation target.  

The IMF previously estimated Albania's economy would grow 2.7% 2011, while the government had hoped for 5% GDP growth; Albanian economic growth was 2.3% in 2010.  Albania's currency, the Lek (ALL) has weakened by about 3% against the US dollar over the past year; the USDALL exchange rate last traded around 105


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