BCEAO cuts key policy rate by 25 basis points to 3.25%

The Central Bank of West African States (BCEAO) decided on 4 June 2025 to cut its policy rates by 25 basis points with effect from 16 June 2025, lowering its main rate, at which it lends to banks, from 3.50% to 3.25%. The decision was taken at a meeting in Dakar of its Monetary Policy Committee, chaired by Governor Jean-Claude Kassi Brou.

The interest rate on the marginal lending facility was reduced from 5.50% to 5.25%, while the reserve requirement ratio applicable to banks was left unchanged at 3.0%. The committee said the reduction should ease financing conditions for economic activity in the West African Economic and Monetary Union (WAEMU). The cut was the first change to the main rate since December 2023, when the BCEAO raised it from 3.25% to 3.50%.

INFLATION EASES

Inflation in the union fell to 2.3% in the first quarter of 2025 from 2.9% in the fourth quarter of 2024, a decline the BCEAO attributed to improved supply of products on markets, slower increases in the prices of imported goods, notably energy, and the effects of monetary policy measures. The central bank forecast inflation of 2.2% for 2025, after 3.5% in 2024.

GROWTH AND CREDIT

Real GDP grew by 7.1% in the first quarter of 2025, after 7.2% in the fourth quarter of 2024, and growth for the full year is projected at 6.4%, after 6.3% in 2024, driven in particular by the manufacturing and extractive sectors. Credit to the economy rose by 5.0% year on year at the end of March 2025 and is expected to reach 8.3% by the end of December. The average interbank rate fell to 6.0%.

The committee said it would pay particular attention to risks that could push prices higher, including the consequences of climate change, the regional security situation and international trade tensions, and would take appropriate measures if necessary to ensure monetary and financial stability in the union, which comprises Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.