Monetary policy is defined by the Monetary Policy Committee (MPC) and its primary objective is to ensure price stability. Its implementation is carried out by the Central Bank of West African States (CBWAS) which is the common issuing institution of the eight (8) Member States of the West African Monetary Union (WAMU).
In 2020, in order to support the economic recovery efforts of Member States following the Covid-19 pandemic, the MPC decided to lower the Central Bank of West African States (CBWAS) key rates by 50 basis points, since 24 June 2020. As a result, the minimum bid rate for liquidity injection tenders was 2.0% instead of 2.5% and the marginal lending rate was 4.0% instead of 4.5%.
Changes in the Central Bank of West African States (CBWAS) key rates since 2013
|
Sep-13 |
Dec-16 |
june-20 |
June-22 |
Sep-22 |
Dec-22 |
March-23 |
June-23 |
Sep-23 |
|
|
Minimum bid rate (%) |
2,5 |
2,5 |
2,0 |
2,25 |
2,5 |
2,75 |
3,0 |
3,0 |
3,25 |
|
Marginal lending rate (%) |
3,5 |
4,5 |
4,0 |
4,25 |
4,5 |
4,75 |
5,0 |
5,0 |
5,25 |
Source : Central Bank of West African States (CBWAS)
In 2021, the Central Bank maintained its accommodative monetary policy stance by continuing its fixed-rate and full-service auctions. Through these provisions, the Central Bank of West African States (CBWAS) fully satisfies the liquidity requests addressed to it via its refinancing windows.
In 2022, noting the persistence of the deviation of inflation from its target zone, between 1% and 3%, the Monetary Policy Committee decided to raise the Central Bank of West African States (CBWAS) key rates successively by 25 basis points in June and September, in order to promote the gradual return of inflation to the target zone.
Thus, the minimum interest rate for bidding on liquidity injection tenders increases from 2.50% to 2.75% and the interest rate of the marginal loan window from 4.50% to 4.75% as of December 16, 2022.
In 2023, the Monetary Policy Committee (CPM) of the Central Bank of West African States (CBWAS) decided, at its meeting held on September 6, 2023, to raise by 25 basis points, the Central Bank’s key rates, starting on September 16, 2023. Thus, the main policy rate at which the Central Bank lends its resources to banks increases from 3.00% to 3.25% and the interest rate of the marginal lending window from 5.00% to 5.25%.
This decision comes against a background of rising regional uncertainties, persistent inflationary pressures, rising financial conditions on international markets and less mobilization of external resources.
The increase in policy rates is therefore intended to anticipate and contain the impact of these risk factors on the Union’s macroeconomic outlook.
The minimum reserve ratio for EU banks remains unchanged at 3.0%.
