Albania's central bank has cut its key interest rate to 1.5% from 1.75% aiming to encourage lending and ensure the return of inflation to its medium-term horizon, the bank said on April 6.
Inflation was 0.2% in February, down from 2% registered in December 2015.
The rapid fall in inflation during the first two months of 2016 was a reflection of lower prices of oil and food, the central bank said in a statement.
These effects are expected to expire in April, the bank said.
Consequently, the updated forecasts suggest that inflation will fluctuate around the level of 1.9% in 2016, compared with 2.3% in previous forecasts.
Further easing of monetary policy aims to give an additional impetus to economic activity, to help increase domestic demand and to improve lending by local banks, governor Gent Sejko said in the statement.
Strengthening of economic activity is expected to increase domestic inflationary pressures, offsetting disinflationary tendencies from outside, he added.
February was the third month in a row that inflation slowed following a stagnation on an annual basis in November 2015.
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