Sejko: The appreciation of the lek has kept inflation lower than the region

2022-11-22 17:52:00Biznes SHKRUAR NGA REDAKSIA VOX
The Governor of the Bank of Albania, Gent Sejko, with the Governor of the National Bank of Austria, Robert Holzmann, at the conference on European economic integration 2022, on the topic "Economic and monetary policy in conditions of war, implications for the countries of Central, Eastern and Southeastern Europe

The Governor of the Bank of Albania, Gent Sejko, with the Governor of the National Bank of Austria, Robert Holzmann, at the conference on European economic integration 2022, on the topic "Economic and monetary policy in conditions of war, implications for the countries of Central, Eastern and Southeastern Europe

The Governor of the Bank of Albania Gent Sejko has explained why inflation in our country is relatively lower compared to the countries of the region, during his speech at the conference on European economic integration 2022, on the topic "Economic and monetary policy in conditions of war – implications for the countries of Central, Eastern and South Eastern Europe”, held in Vienna, Austria.

He emphasized that, like other countries, Albania is also affected by high inflation, which reached 8.3% in October. However, this level is one of the lowest inflation rates in the region, while the rest of the Western Balkan countries have an average inflation rate of nearly 16%.

In this regard, Sejko underlined that unlike most other countries in the region, the nominal exchange rate in Albania has continued to appreciate, mitigating the transmission of external price shocks to the country's economy.

Our currency, the lek, has appreciated by an average of 2.5% against the euro during 2022, due to strong tourism revenues, high FDI and stable risk premia in our domestic financial markets. This behavior is further reinforced by a convergence of our monetary policy cycle with that of the Eurozone.

In parallel, the regulated price of electricity for household consumers in Albania has helped to absorb foreign pressures.

In the face of strong and stable inflationary pressures, Governor Sejko underlined that the monetary policy should be oriented towards maintaining price stability, as a prerequisite for financial stability and for the sustainable economic growth of the country in the long term.

In these circumstances, the Bank of Albania has undertaken a gradual process of normalization of the monetary policy, showing care that the speed of this normalization ensures the return of inflation to the target in a reasonable period of time and at the lowest possible costs for economic activity.

Also, the Governor pointed out the fact that the projections of our basic scenario suggest that the Albanian economy will continue to grow and that the financial stability of the country will remain intact, even in the presence of the normalization of the stance of monetary policy.

Focusing in particular on the issue of financial stability, Governor Sejko said that from our analysis, the banking sector appears liquid, well-capitalized and resistant to shocks, both in the basic scenario and in the most extreme theoretical scenarios.

This resistance reflects, among other things, the positive effects of the structural reforms undertaken in terms of improving banking supervision and regulation, the consolidation of the banking sector, the strengthening of security networks, as well as the improvement of internal control systems. banks.

However, the Governor stressed that the Bank of Albania will continue to remain attentive to any potential risk on financial stability, aiming to take the necessary measures in time to guarantee it. The extensive experience that the Bank of Albania has created in the administration of shocks in the past offers more security for the banking sector and for the Albanian economy itself.

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