Looser Monetary Policy Will Have Little Growth Effect


BMI View: A 30-basis-point cut to interest rates in the CEMAC zone will have little impact on the bloc's economy, which remains poorly integrated and heavily dependent on oil exports. Official growth forecasts remain overly optimistic.

Central Africa's Banque des États de l'Afrique Centrale (BEAC) cut its key interest rate on July 8 by 30 basis points (bps), taking the Taux d'Intérêt des Appels d'Offres to an all-time low of 2.95%.   The most recent cut is only the latest in a multi-year period of monetary loosening that has seen the BEAC halve its key interest rate.

The goal of this policy is to boost economic growth within the Communauté Économique et Monétaire de l'Afrique Centrale (CEMAC), which is struggling owing to a combination of stagnating oil production, poor business environments, and - to a lesser extent - the security crisis in the Central African Republic (see '20 Years of CEMAC: Little To Celebrate', March 21).

Slashing Rates Further
CEMAC - Taux d'Intérêt Des Appels d'Offres, %

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Related sectors of this article: Economy, Monetary Policy
Geography: Cameroon

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