The Central Bank of Liberia’s Monetary Policy Committee maintained the Monetary Policy Rate at 16% but tightened other settings to improve policy transmission, liquidity management and resilience against risks from high financial dollarization. It raised the reserve requirement on US dollar deposits by 2 percentage points to 12%, kept the requirement on Liberian dollar deposits at 25% and narrowed the interest rate corridor by moving the Standing Deposit Facility from 5.5 to 6 percentage points below the policy rate and the Standing Credit Facility from 1 to 0.5 percentage points above it. The committee judged the restrictive stance appropriate as headline inflation declined to an estimated 4.5% from 5.4% in the previous quarter and is forecast at about 4.6% in the fourth quarter of 2026. Real gross domestic product growth is projected at 5.5% in 2026, up from 5.1% in 2025, while international reserves covered 3.3 months of prospective imports. Banks remained well capitalized and liquid, but the 13.38% nonperforming loan ratio, financial dollarization and concentrated credit allocation remain domestic risks. The next committee meeting is scheduled for January 20, 2027.
Central Bank of Liberia holds policy rate at 16%, raises US dollar reserve requirement to 12%
The Central Bank of Liberia held its policy rate at 16% while raising the reserve requirement on US dollar deposits to 12% and narrowing its interest rate corridor. The changes target monetary transmission, liquidity management and vulnerabilities from financial dollarization. Inflation eased to 4.5%, while 2026 economic growth is projected at 5.5%.