Central Bank of Liberia raises policy rate 25 basis points to 17.25 percent amid higher inflation

The Central Bank of Liberia published its Monetary Policy Committee decision for the first quarter assessment, tightening policy by raising the Monetary Policy Rate by 25 basis points to 17.25 percent until the next assessment. The committee left the standing facilities corridor unchanged at plus 2.5 percentage points for the Standing Credit Facility and minus 7.5 percentage points for the Standing Deposit Facility around the policy rate, and kept reserve requirement ratios at 25 percent for Liberian dollar liabilities and 10 percent for US dollar liabilities. The move followed a rise in average inflation to 12.8 percent in the first quarter from 8.7 percent in the previous quarter, while the Liberian dollar depreciated by 7.1 percent on an average basis and 8.2 percent on an end-period basis against the US dollar. The committee said domestic growth remained on track with the 2025 projection of 5.6 percent, supported in the first quarter by higher consumption and public spending, although activity is expected to moderate in the second quarter because of seasonal production effects. It described the banking sector as capitalized and liquid, with a capital adequacy ratio of 31.5 percent against a 10.0 percent minimum, but flagged nonperforming loans at 26.7 percent as the main financial stability risk. On the external side, the trade balance moved to a deficit of 3.1 percent of gross domestic product from a 0.1 percent surplus in the fourth quarter of 2024, while gross international reserves rose 10.4 percent to USD 526.0 million, equal to 3.6 months of import cover. The committee also pointed to stronger CBL bill subscriptions, three swap transactions totaling USD 26.0 million and two foreign exchange purchases totaling USD 25.0 million in the interbank market as part of liquidity and market operations.