CEMAC Rates To Remain Stable In 2014
BMI View: Contained inflation in most states and a regional economic recovery make it unlikely that the BEAC will cut rates again in 2014. Were the central bank to act, however, BMI stresses that Central Africa's shallow financial system and weak transmission mechanisms mean that a change in monetary policy would have little impact on the region's economy. Risks are weighted towards a further cut rather than a rate hike.
The Banque Centrale des Etats d'Afrique Central (BEAC) elected to hold its key interest rate at 3.25% at its last monetary policy meeting of 2013, and we believe that the bank is likely to keep interest rates steady for the duration of 2014. The bank, which controls monetary policy for the six-member Communauté Économique et Monétaire de l'Afrique Centrale (CEMAC) has traditionally followed a conservative interest rate policy, and this informs our forecast of policy stability.
The two interest rate cuts seen in 2013 were very much an exception, and we expect that on-target inflation will prevent another cut. While economic growth is accelerating, BMI believes that the recovery in CEMAC is still sufficiently fragile that a hike is unlikely. Even in the event of a change to interest rate policy, however, BMI stresses that the bank's monetary policy has a minimal effect on the real economy of the CEMAC states.
|Steady As She Goes|
|CEMAC - Key Interest Rate, End-Of-Year (%)|