Central Bank of Liberia Retains Monetary Policy Rate at 25%

MONROVIA – November 19, 2020:The Board of Governors of the Central Bank of Liberia (CBL), during its November 17, 2020 sitting, approved to retain the monetary policy rate of 25.0 percent in the previous quarter.


The decision was driven by developments in the global and domestic economies in quarter three, projected headline inflation in the bandwidth of about 14.7 plus or minus 3.0 percentage points for quarter 4, and the high level of currency outside banks.


The monetary policy rate of 25.0 percent is expected to support liquidity management by not only attracting investment for the CBL Bills, but also retaining currency in the banking system, while at the same time strengthening CBL’s capacity to protect the purchasing power of consumers.


Global and Regional Developments

On the global front, commodity prices relatively strengthened during quarter three of 2020, with global inflation for 2020 projected to moderate at 3.2 percent, from 3.5 percent in 2019. Monetary policy rates in advanced economies remained stable at 0.25 percent and 0.10 percent in the United States and the United Kingdom, respectively. On the regional front, monetary policy rates in most countries of the West African Monetary Zone (WAMZ) remained stable, except in Nigeria, where the rate was lowered.



Domestic Macroeconomic Developments

Real gross domestic product for 2020 is projected to remain in contraction at 2.5 percent, despite the resumption of several businesses in quarter 4 of 2020 due to the easing of lockdown measures.


Annualized inflation moderated by 2.7 percentage points to 15.3 percent at the end of quarter 3 from 18.0 percent at the end of quarter 2, reflecting weak domestic demand and relative effectiveness of monetary policy operations.


Developments in the external sector were mixed, but generally constrained by low gross international reserves below the ECOWAS regional threshold of three months. The deficit in trade balance account expanded to 6.43 percent of GDP from 3.79 percent of GDP in the previous quarter, largely reflecting 25.15 percent rise in import payments and 10.0 percent contraction in export receipts. The net inflow of workers’ remittance rose by 2.1 percent to US$49.4 million in quarter 3, from 48.4 in quarter 2 of 2020. However, the Liberian dollar appreciated against the US dollar in nominal and real terms by 4.5 percent and 13.3 percent, respectively, at the end of September 2020.


In quarter 3, the banking industry generally remained stable, despite the rise of non-performing loans by 4.4 percent above the regulatory tolerable limit. Currency outside the banking system rose by 8.2 percent to L$20.83 billion, while currency in the banking system declined by 15.4 percent to L$1.27 billion during the period.


In the operationalization of the Board’s decision regarding the monetary policy implementation, the CBL intends to pursue extensive financial education with the aim of engendering greater public subscriptions of the CBL’s instruments during the remaining weeks of 2020 and beyond.




For more inquiries contact:


Cyrus W. Badio

Head of Corporate Communications

Central Bank of Liberia

Email: cwbadio@cbl.org.lr