Quarterly Monetary Policy Report, November 2015

The Albanian economy continues in the positive trajectory. However, aggregate demand, output and employment stand below their potential and medium-term pressures on inflation remain weak. The external environment appears still challenging and domestic resources for economic growth appear as not yet consolidated. In the medium-term horizon, the Bank of Albania expects inflation to return gradually to target, corroborated by the progressive improvement of economic growth. Unlike previous forecasts, current projections suggest that the return of the economy to equilibrium and of inflation to target will require a somewhat longer time. These projections suggest the need for stepping up the monetary stimulus in the economy, to bolster further domestic demand and strengthen further the credit channel. Considering this report, the Supervisory Council of the Bank of Albania lowered the key interest rate, by 0.25 percentage points, down to 1.75%.