October 6 (SeeNews) - Albania's central bank decided to increase its key interest rate to 2.25% from 1.75% as inflationary pressures continue to increase due to shocks on the supply side and heightened uncertainty in international markets, central bank governor Gent Sejko said.
The central bank also raised the interest rate on the overnight lending facility to 3.25% from 2.75%, as well as the rate on the overnight deposit facility to 1.25% from 0.75%, Sejko said in a statement on Wednesday.
"The gradual normalisation of monetary policy stance, from the quite simulating position in the current form, to a more neutral position, is indispensable to pursue our inflation target of prices. In this view, this normalisation paves the path for the overall economic and financial stability of Albania, the sustainable and long-term growth and the improved social welfare," Sejko said.
Albania's consumer price inflation reached 7.5% in July and 8% in August as a result of the higher prices of oil and food on the global level. The central bank expects inflation to start slowing down in 2023 and return to target in the first half of 2024, according to the statement.
However, projections remain uncertain, with inflationary risks tilted to the upside and those related to economic growth - to the downside, Sejko said.
Since the beginning of 2022, Albania's central bank has raised its key policy rate three times - in July, March and August.