Bad news, loans will become more expensive

The increase in the basic interest rate by the Bank of Albania at the beginning of this month has also been followed by the increase in the yield of 12-month treasury bonds.

In the auction conducted on Tuesday, the weighted average yield of these instruments increased to 3.31%, from 3.1% that had been in the last auction, conducted at the end of October. 12-month bond yields rose to their highest level since May this year.

Market demand in the last auction was significantly lower compared to previous auctions.

Of the 9 billion ALL that was the amount announced for financing by the Ministry of Finance and Economy (MFE), a total of requests for approximately 8.3 billion ALL were presented at the auction.

Finally, MFE accepted requests in the amount of about 8 billion ALL. In the event that all requests were accepted, the average yield of the issue would be slightly higher, at the level of 3.34%.

Such a yield would bring almost full tracking of the base rate increase to the 12-month bond yield.

An increase in bond yields is automatically transmitted to loan interest rates, bringing more expensive installments for borrowers.

The price increase is expected to further slow down credit and curb domestic demand in the economy./ Monitor