Central Bank of Liberia keeps policy rate at 17.0 percent and reintroduces interest rate corridor

The Central Bank of Liberia’s Monetary Policy Committee kept the Monetary Policy Rate at 17.0 percent, maintained reserve requirement ratios at 25.0 percent for Liberian dollar liabilities and 10.0 percent for US dollar liabilities, and reintroduced the corridor system for its standing facilities. Under the corridor, the standing credit facility will be set at the Monetary Policy Rate plus 2.5 percentage points and the standing deposit facility at the Monetary Policy Rate minus 7.5 percentage points. The decision came as domestic growth moderated and inflation accelerated. Quarterly real gross domestic product slowed to 1.7 percent in the fourth quarter from 5.3 percent in the first quarter of 2023, while consumer price inflation rose to 8.7 percent from 5.9 percent in the third quarter of 2024 and is projected at 10.3 percent, plus or minus 2.0 percent, in the first quarter of 2025, largely because of higher domestic food prices. The committee also flagged weaker banking-sector balance sheet indicators, with total assets, deposits, and loans and advances down from the previous quarter, although non-performing loans improved to 19.2 percent from 21.3 percent and remained above the bank’s 10.0 percent tolerable limit. On the external side, it highlighted a wider projected trade deficit of USD67.1 million, down from gross international reserves covering 2.8 months of imports versus 3.1 months previously, even as the Liberian dollar appreciated against the US dollar during the quarter.