The Supervisory Council of the Bank of Albania decided to maintain the base interest rate unchanged at 3%.

The governor of the bank Gent Sejko said that the new information received by the bank was better than expectations, underlining that inflation continued its downward trend during the first quarter, influenced by the general drop in inflation in the global market.

However, the governor admitted that the decline in inflation came mainly from imported inflation, while internal inflationary pressures remain high, adding that the fulfillment of the objective of price stability may require a further normalization of the stance of monetary policy in the future.

On the other hand, the governor said that internal inflationary pressures continued to be high, reflecting the relatively high demand for goods and services, the tight conditions in the labor market, and the rapid increase in wages and labor costs. The Supervisory Council considers that high inflationary pressures from the domestic economy remain a risk factor for price stability in the country.

The Council will carefully monitor the situation to continuously assess the progress of inflationary pressures and to identify in time the necessary measures to achieve the objective, including the further normalization of the stance of the monetary policy.

In any case, monetary policy will ensure the necessary conditions for respecting the objective of price stability in the medium term, taking care at the same time to minimize its impact on the inhibition of economic activity and possibly undesirable consequences on stability financial," said Sejko.

According to Sejko, the rapid growth of employment and wages give encouraging signals for the sustainability of economic growth in the future, but they also create a favorable environment for the increase of internal inflationary pressures.

He underlined once again that high inflation, above the central bank's target, is harmful to families and businesses, as it erodes the purchasing power of their income and makes it difficult to plan consumption and investments in the future.

The Bank of Albania's forecast update suggests that the Albanian economy will continue to grow and that inflation will decline gradually and return to target in the first half of 2024.

According to Sejko, the country's economic growth is expected to continue to be in positive territory. The growth rate is expected to slow down slightly during 2023 and return to historical levels in the medium and long term.