Albanian central bank raises interest rate by 0.5 pct amid inflation rise

The Albanian central bank has raised its interest rate by 0.5 percent amid heightened inflationary pressures, Governor of the central bank Gent Sejko said on Wednesday.

The Albanian interest rate now stands at 1.75 percent.

Sejko announced the move at a press conference after a meeting of the Supervisory Council of the central bank.

The high inflation rate is the main risk to the country's economy, he explained, with soaring food prices set to continue. Price rises are significant for all products, he said, and prices on world markets have been rising since the Russia-Ukraine conflict.

"Banks have raised interest rates and uncertainty remains high," he said. "Inflation will peak during the second half of the year. We will normalize monetary policy to keep inflation under control.

"Consumer prices continued to increase in the second quarter (of 2022). Inflation marked a progressive increase during this period, culminating at the level of 7.4 percent in June."

The central bank also raised the overnight lending rate to 2.75 percent from 2.25 percent, as well as hiked the rate on the overnight deposit facility to 0.75 percent, up from 0.25 percent.

The central bank expects inflation to remain high this year, and not to return to the 3 percent target until the first half of 2024.