PRESS RELEASE
The Supervisory Council of the Bank of Albania, decided to cut the base interest rate by 0.25 percentage point

The Supervisory Council of the Bank of Albania, in its meeting held on November 4, 2004, decided to cut the base interest rate by 0.25 percentage point. After this change, the interest rate to be applied to weekly auctions of repurchase agreements (Repo) shall be 5.25 percent. This rate constitutes a new historical minimum of the base interest rate in Albania.

Cutting of the base interest rate was decided after a general analysis on the Albanian economic situation and, particularly, on the inflation indicators. The Albanian economy has shown significant progress of the economic growth and improvement of the employment indicators, after a first quarter somewhat slow. The economic growth is performed under the conditions of a general macroeconomic stability: bugdet deficit, current account deficit and monetary indicators have been stable during that period. Also, inflation was on moderate levels during 2004, approaching to the minimum limit of the Bank of Albanian targeted range during the last quarter. The Bank of Albania forecasts show that inflation will be slow even in the following period.

Analysis on the monetary conditions in the economy showed that there were spaces for a further easing monetary policy. This policy is consistent with the one followed up to now by the Bank of Albania, whose objective was always the maintenance of the most appropriate monetary conditions that are in compliance with the inflating targeting. Further reduction of the Lek borrowing cost in the economy will encourage the Lek crediting, will impact the reduction of the public debt service cost and will ease the Lek appreciation pressures. Also, such a step will have positive impacts on the increase of the demand of economy.