Base interest rate not expected to increase in 2017: BoA “assures” households and businesses

The Bank of Albania has oriented markets on the continuation of the alleviating monetary policy throughout this year.

Based on the information of the quarterly monetary policy report, BoA’s Supervisory Board has indicated that the intensity of monetary stimulus will not decrease before the first quarter of next year.

This means that the basic interest rate is expected to rise during this year, although the economy is expected to reach the level of its potential growth, a level that has seen a drop to slightly less than 4%.

Based on these conditions, the private sector and the government will continue to benefit from low interest rates from financing in local currency.

For families and businesses, this means that the credit will continue to be cheap, while return on deposits will remain at low levels.

According to data from the Bank of Albania, in March of this year the interest rates of new loans in ALL for individuals averaged 7.38% and 6.8% for businesses.

These rates are at similar levels with those of the end of last year and loan interest rates continue to remain at historic lows.

This has favored investments at lower cost for both businesses and households.

However, the quantitative credit growth remains modest. Not counting the effect of loans written by off the balance sheets of banks, the credit growth at the end of the first quarter was 3.3%.

The increase is mainly driven by lending in local currency.

Bank of Albania expects a higher growth this year, when demand is expected to improve the growth of the real economy, while the offer of banks may be higher, also thanks to the reduction of nonperforming loans at 17.4%, the lowest level since 2011.

SCAN

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