Central Bank of Liberia lower its main interest rate by 100 basis points to 16.25%, citing falling inflation and improved external balances that permit a modest easing of monetary policy.
Inflation moderated sharply to an estimated 6.1% in Q3 2025, down from 11.1% in the previous quarter, driven mainly by lower domestic food prices and easing imported inflation, the Monetray policy Committee said Friday.
The MPC signaled confidence that headline inflation will remain within its tolerance band (around 6.3% ±2 percentage points), notwithstanding a possible seasonal uptick in Q4.
CBL highlighted several supportive developments: a stronger external position—gross international reserves rose to US$544.8 million (about 2.4 months of import cover), an estimated 8.1% increase in personal remittances to roughly US$228.2 million, and favorable commodity price movements (notably gold and lower global food and fuel prices).
The IMF’s upward revision of 2025 global growth was also noted as a mitigating factor for downside risks.
Financial sector metrics were mixed but broadly supportive of the easing. The banking system’s Capital Adequacy Ratio remained robust at 34.9%, liquidity improved. Liquidity ratio rose to 57.9% but non-performing loans stayed elevated at 15.8% despite recent improvements. Monetary aggregates showed a slight contraction in M2, reflecting lower net domestic assets.
The MPC maintained the interest rate corridor at +2.5/-7.5 percentage points around the Monetary Policy Rate and left reserve requirement ratios unchanged at 25% (Liberian dollars) and 10% (US dollars).
The committee also noted ongoing government debt operations, including a US$22.6 million Treasury bond issuance during the quarter.
Market implications
The 100bp cut is likely to ease short-term borrowing costs and could prompt banks to adjust lending and deposit rates gradually, supporting private-sector credit and consumption. Still, elevated NPLs, fiscal expansionary pressures and external risks mean the CBL is keeping a cautious stance: it emphasized continued monitoring and coordination with fiscal authorities. The MPC’s next meeting is scheduled for 21 January 2026.
