Further Policy Easing Likely

The Bank of Albania's November 30 interest rate cut, which takes the monetary authority's policy rate to 4.75%, came sooner than we had anticipated - we had forecast rates to remain on hold on 5.00% until end-2011 with further easing following in 2012. As a result, we have revised down our end-2012 policy rate forecast to 4.50%, as we believe that relatively weak growth and modest inflation provide ample scope for further policy stimulus by the central bank.

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