Central Bank of Liberia raises its benchmark interest rate by 25 basis points to 17.25%,in response to escalating inflationary pressures.
This adjustment aims to combat surging inflation, which has climbed significantly to an estimated average of 12.8% in the first quarter of 2025, up from 8.7% in the previous quarter.
CBL Monetary Policy Committee expressed serious concern regarding the deterioration of real income within the economy and highlighted that inflationary trends are being driven by structural constraints.
Despite the muted performance forecasted for the remainder of the year, with an expected average inflation rate of 12.8% +/- 2.0%, the MPC remains optimistic about the potential reversal of this trend, bolstered by proactive monetary policies and enhanced coordination with fiscal authorities.
The increase in the Monetary Policy Rate (MPR) comes as the global economic recovery shows signs of fragility, with geopolitical risks and trade frictions contributing to persistent inflation in various economies.
While the International Monetary Fund (IMF) suggests a moderation of global headline inflation to 4.2% in 2025, certain regions—including Sub-Saharan Africa—continue to grapple with elevated levels of inflation, projected at 12.3%.
In the context of Liberia’s banking sector, the MPC noted an adequate capitalization and liquidity level despite a slight decrease in the liquidity ratio. However, risks associated with non-performing loans (NPLs), especially as they have surged to 26.7%, present ongoing challenges.
The central bank is implementing measures to mitigate these risks, including an approved NPL Resolution Framework aimed at stabilizing the financial landscape.
Looking ahead, while economic activity in Liberia was bolstered by strong public sector spending in the first quarter, the MPC anticipates a slowdown in the second quarter, influenced by seasonal production contractions.
The Central Bank’s approach to maintaining monetary stability is critical as it monitors both domestic and international economic conditions, pledging to adapt its strategies to uphold macroeconomic stability and protect consumer purchasing power amidst rising inflation.
