The Central Bank of Liberia kept its monetary policy rate at 16.25% on April 27, saying a cautious tightening stance remains appropriate as rising global commodity prices and exchange-rate pass-through threaten to push inflation higher even as the domestic economy expands.
The Monetary Policy Committee (MPC) maintained the interest rate corridor at +2.5 and -7.5 percentage points around the policy rate and left reserve requirements unchanged at 25% for Liberian dollar deposits and 10% for U.S. dollar deposits.
The committee said it will continue to use CBL bills, standing facilities and targeted liquidity operations to manage short-term liquidity and support policy transmission.
Headline inflation eased to 3.6% in Q1 2026 from 4.4% in Q4 2025 and remained within the bank’s single digit objective, driven mainly by lower food and market prices. But the MPC warned imported price pressures were building toward the end of the quarter and projected inflation to rise to about 5.3% (±2 percentage points) in Q2 as higher fuel and food costs and exchange rate effects feed through.
“The Committee concluded that maintaining a cautious tightening bias remains the most appropriate course of action at this time,” the bank said, citing the medium-term outlook and upside risks from global commodity markets and tighter external financing conditions.
On the macro side, the bank described the economy as resilient, with growth consistent with a 5.1% annual projection supported by mining, agriculture and a rebound in manufacturing and services. The Composite Index of Economic Activity stayed expansionary, though the output gap widened to an estimated 3.9%, signaling positive demand pressures.
The banking system was judged broadly stable and well capitalized, with total capital rising 10.6% to L$53.4 billion and a liquidity ratio of 53.2%, comfortably above the 15% minimum. Nonetheless, nonperforming loans remain a concern — NPLs exceeded the regulatory threshold by about 2.98 percentage points, with U.S. dollar denominated loans accounting for most of the problem assets.
External balances showed improvement: export receipts from gold, iron ore and round logs increased, remittances supported foreign exchange supply, and gross international reserves rose to roughly US$722.5 million, equivalent to about 2.9 months of imports — just below the conventional three-month benchmark.
The MPC flagged a risk mix skewed to the upside for inflation and to the downside for growth, naming elevated fuel and food prices, tighter global financing conditions, exchange rate pressures, high dollarization, elevated NPLs and potential fiscal pressures as key vulnerabilities.
The committee said it will monitor developments in the Middle East and other external shocks and remain prepared to respond with data driven policy actions.
