In brief
- The Monetary Policy Committee (MPC) of the Central Bank of West African Economic and Monetary Union (WAEMU) maintained its key interest rate at 3.0% on 7th June 2023. The MPC’s decision was supported by the gradual easing of inflationary pressures following cumulative hike of 100bps from June 2022 to March 2023.
- While the ongoing disinflation in the WAEMU since 4Q2022 provided a strong basis for the MPC’s decision, the recently commenced IMF-supported fiscal reforms programme in Côte d’Ivoire and Senegal could revive inflationary pressures in 3Q2023.
- Expectedly, the MPC emphasized its continued vigilance over the evolution of inflation and the financing conditions within the Union, and would take appropriate measures to ensure the monetary stability of the WAEMU zone.
- The Monetary Policy Committee expects inflation to fall below 3.0%, in line with the Central Bank’s target by 4Q2023. However, we foresee elevated inflation rate around 6.0% in 2H2023 due to the higher price effects of expected fiscal reforms under the IMF programme. Despite a potential reforms-induced spike in inflation, we do not anticipate any change in the monetary policy stance as long as inflation does not overshoot its recent peak
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