APA-Dakar (Senegal) After pausing its crusade against inflation at the 3rd meeting of its Monetary Policy Committee (MPC), the Central Bank of West African States (BCEAO) has decided to raise its key interest rates again.
At the end of its 4th and final MPC meeting for 2023, the monetary institution raised the main rate at which it lends its resources to commercial banks to 3.5 percent, an increase of 0.25 percent.
“This decision comes at a time when the risks of a return to inflationary pressures are increasing due to growing international and regional uncertainties. It also reflects the tensions in the Union’s external accounts. The increase in the key interest rates is therefore aimed at anticipating and limiting the impact of these risk factors,” explained Jean-Claude Kassi Brou, Governor of the BCEAO.
According to Mr. Brou, this new increase should not have a negative impact on the economy, which is still financed by the banks.
“Loans to the economy continue to grow at a sustained pace, recording an annualized increase of 13.9 percent at the end of September 2023, after 16.2 percent at the end of June 2023. In particular, loans to private companies increased by 15.0 percent, following growth of 18.9 percent in the previous quarter. Loans to households increased by 9.8 percent, after 11.3 percent three months earlier,” he added.
According to the CPM, economic activity in the UEMOA maintained its upward momentum in the third quarter of 2023, pointing to projected economic growth of 5.7 percent for 2023 as a whole. The annual inflation rate is expected to be 3.7 percent at the end of 2023, down from 7.4 percent in 2022.
For 2024, the governor expects a growth rate of between 6 and 6.5 percent, thanks to the start-up of several major projects, including hydrocarbon production in Niger and Senegal, and the commissioning of several mines in Burkina Faso and Mali.
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