The Bank of Albania assesses that the outlook for economic developments remains positive, despite the growing uncertainties in the international environment.

In the Monetary Policy Report for the second quarter of 2026, the Bank of Albania emphasizes that in the baseline scenario, built on the assumption of a quick end to the conflict in the Middle East and a gradual normalization of energy prices, our economy is expected to continue growing, although at more moderate rates during 2026, the bank said in a press release on Friday.

According to the report, inflation is expected to remain close to the target in the medium term, while it may mark a slight increase compared to previous forecasts during 2026, but without significant deviations from the target. The Bank of Albania assesses that risks to the global economy have increased, mainly due to geopolitical developments and fluctuations in energy prices, which have begun to affect international inflation.

However, according to the Central Bank, the Albanian economy presents strong premises for coping with external shocks, thanks to moderate exposure to energy and macroeconomic stability. At its last meeting, the Supervisory Council of the Bank of Albania decided to keep the key interest rate unchanged at 2.5%.

The main objective of the monetary policy of the Bank of Albania is to achieve and maintain price stability. Price stability means achieving low, but positive, inflation rates and maintaining them at these levels for a relatively long period of time.

By maintaining price stability, the Bank of Albania helps to create a stable monetary environment and helps Albanian households and businesses to plan their consumption and investments. In quantitative terms, the Bank of Albania defines price stability as an annual consumer price inflation of 3.0% in the medium term.

To achieve its price stability objective, the Bank of Albania applies the inflation targeting regime and the free exchange rate regime. In accordance with these regimes, the monetary policy stance is expressed through the level and direction of the change in the key interest rate, set by the Supervisory Council. Changes in the base interest rate affect – with a time lag – the performance of liquidity and other interest rates in the financial market, expectations for the future, as well as the exchange rate. In turn, these factors dictate the demand for goods and services and the dynamics of consumer costs and prices.

The Supervisory Council of the Bank of Albania meets eight times a year to make monetary policy decisions, which aim to achieve the objective of price stability.

The Supervisory Council's decisions on monetary policy are made based on a variety of information, including assessments of economic developments, inflation forecasts, financial market performance, and the risks and uncertainties surrounding the forecasts.