West African Central Bank Maintains Key Rate on Inflation Concerns

BREAKING NEWSSeptember 12, 2024 at 11:50 AM UTC

TLDR

BCEAO maintains key interest rate at 3.50% in 3rd Monetary Policy Committee meeting amid persistent inflation and regional economic challenges
Inflation in WAEMU rose to 4.1% in Q2 2024, driven by unfavorable conditions and increased costs of imported food products
Central Bank projects average 3.7% inflation for 2024, targeting a return to 1%-3% range in 2025 with improved agriculture and lower global food prices

The Central Bank of West African States (BCEAO) opted to maintain its key interest rate at 3.50% during its 3rd Monetary Policy Committee meeting this week in Senegal, amid persistent inflation and regional economic challenges.

Inflation in WAEMU reached 4.1% in the second quarter of 2024, up from 2.9% in the previous quarter, driven by unfavorable agricultural conditions, supply disruptions, rising energy prices, and increased costs of imported food products.

The Central Bank projects an average inflation rate of 3.7% for 2024, with expectations for a return to the target range of 1%-3% in 2025, aided by improved agricultural output and falling global food prices.

Key Takeaways

For the BCEAO, prudence is needed in navigating the current economic climate, aiming to balance growth support while managing inflation risks. WAEMU’s economic growth forecast for 2024 remains strong at 5.9%, bolstered by structural reforms and resilience in key sectors such as agriculture and services. In addition to maintaining the key rate, the BCEAO kept the marginal lending window rate at 5.50%. These measures signal continuity in monetary policy, ensuring favorable financing conditions while avoiding further inflationary pressures.

Economy

Interest Rates

Inflation

BCEAO

Francophone West Africa

WAEMU

UEMOA