25bps More Cuts In 2013

BMI View: Inflationary pressures will remain subdued in Albania over the coming months, due to easing agricultural prices and low demand-pull price dynamics. The National Bank of Albania (BoA) will lower its policy interest rate by 25bps to 3.25% by the end of 2013, and by a further 75 bps in 2014, as low prices allow the central bank to try to stimulate growth through adopting a more accommodative monetary policy.

The Bank of Albania (BoA) lowered its policy interest rate by 25 basis points (bps) to 3.50% in July, in line with our view that the central bank would continue its rate cutting cycle in H213 (see 'Inflationary Pressures To Ease', May 21) . We hold to our forecast for the central bank to lower the policy interest rate by a further 25bps to 3.25% by the end of 2013, but revise down our forecast for rates to be lowered to 2.50% in 2014, from 3.00% previously. The downgrade comes against the backdrop of increasingly dovish statements made by BoA Governor Ardian Fullani , who said the July interest rate cut was

needed to "create better conditions for the growth of domestic demand".

Record Low
Albania - Bank of Albania Interest Rate, %

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This article is tagged to:
Sector: Country Risk
Geography: Albania, Albania, Albania, Albania