Quarterly Monetary Policy Report, August 2015

Economic activity posted growth in H1, but inflationary pressures remained subdued. Annual inflation averaged 1.8% in Q2, remaining below Bank of Albania's target. Low inflationary pressures continue to be determined by the below-potential growth of the economy. In addition, they are affected by low inflation rates in partner countries and low inflation expectations. The contribution of these factors will persist in the short-term horizon, but inflation is expected to return to target within a medium-term period. In the medium term, economic activity in Albania is expected to continue the upward trajectory, reflecting favourable financing conditions, reduction of risk premiums at home and improvement of economic and financial activity in the euro area. In accordance with such projections, the Bank of Albania deems that the return of inflation to target will require maintaining the accommodative monetary policy stance for some time ahead.