Interest rate increases

“The Supervisory Board estimated that inflation remains under control and its progress will be in line with the Albanian Bank predictions.” Mr. Fullani declared.

In contrast to these expectances brought to the public, the Albanian Bank announced a sudden interest rate increase by 0.25 percent. The governor’s analysis this time was totally different.

“Under the influence of price increases in the world markets, the inflation norm had a sudden jump this February, warning of new inflation fractions increases in the inner market. This speed of inflation wasn’t predicted.” Fullani declared.

Except international market prices, the pre-election situation in Albania wasn’t in the Bank’s favor to keep the interest rates unchanged. Increasingly electoral expenditures by the government were a threat.  

“This period coincides with an increased attention to the indispensable and effective return of the fiscal and monetary policies. Today’s decision precedes a calm period of caution.” Mr. Fullani confirmed.

In these unfavorable circumstances, the only hope for short term inflation is the growth of domestic production.

“The progress on prices will depend on balance, on domestic production.” Albanian Bank governor specified.

Even though the Albanian Bank doesn’t seem surrendered to the price increase tension, the cost of the latest decision of raising the interest rate might reflect on loan costs.

“Even though the first impression might be that of a setback on demand growth, this decision will increase demands for a better anchorage of the Albanian Bank in order to keep the inflation under control’, Fullani concluded.

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