Rising global oil prices, a depreciating Liberian dollar and mounting inflation risks have prompted the Central Bank of Liberia to hold its benchmark monetary policy rate at 16.25 percent, signaling it stands ready to tighten further if conditions worsen.
The decision was announced Thursday during the official reading of the bank's 26th Monetary Policy Communiqué, following an April 27 meeting of the Monetary Policy Committee. The committee said its stance reflects growing global uncertainty and the need to safeguard price and exchange rate stability.
CBL Executive Governor and MPC Chairman said the policy direction was guided by the bank's mandate to maintain price stability, support financial system resilience and promote sustainable economic growth.
"The most appropriate course of action at this time is to maintain a cautious tightening bias," the governor said, adding that the bank remains committed to a data-driven approach in responding to evolving economic conditions.
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The MPC noted that while inflation remains within the bank's single-digit target, risks are rising due to external shocks, particularly a recent surge in global oil prices linked to geopolitical tensions in the Middle East.
The International Monetary Fund has revised its 2026 global growth forecast downward from 3.3 percent to 3.1 percent, the committee said, reflecting disruptions in supply chains, trade uncertainties and volatility in energy markets. Global headline inflation is projected to rise to 4.4 percent before easing in 2027, pressures the MPC warned would hit import-dependent economies like Liberia especially hard.
Domestically, Liberia's economy showed resilience in the first quarter of 2026, expanding in line with an annual growth projection of 5.1 percent, driven mainly by mining, agriculture, manufacturing and services.
Inflation declined to 3.6 percent in the first quarter from 4.4 percent in the previous quarter, largely due to lower food and market prices. The MPC warned, however, that inflation is expected to climb to around 5.3 percent in the second quarter, reflecting higher fuel and imported food costs as well as exchange rate pass-through effects.
"The outlook remains cautiously optimistic, but risks to inflation are tilted to the upside," the committee said.
The banking sector remains broadly stable, with capital and liquidity levels above regulatory minimums. Total capital increased 10.6 percent to L$53.4 billion, while the liquidity ratio stood at 53.2 percent, well above the required threshold.
The MPC flagged concern, however, over non-performing loans totaling L$13.5 billion, which remain above the regulatory limit and pose potential risks to financial stability. Credit growth remained modest, rising 1.6 percent to L$104 billion, with lending concentrated in trade, personal and services sectors and limited financing reaching agriculture and infrastructure.
Liberia's foreign reserves rose to $722.5 million, equivalent to roughly 2.9 months of import cover, slightly below the internationally recommended three-month benchmark. The Liberian dollar depreciated about 2.9 percent during the quarter, underscoring ongoing external vulnerabilities.
The MPC also pointed to persistent fiscal deficits despite improved government revenues, stressing the need for fiscal discipline, prudent debt management and stronger coordination between fiscal and monetary authorities.
Export earnings rose on improved gold and rubber performance, and remittance inflows continued to support foreign exchange availability. Rising import bills for fuel and food, however, continue to weigh on the trade balance.
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The MPC maintained reserve requirements at 25 percent for Liberian dollar deposits and 10 percent for U.S. dollar deposits, leaving the interest rate corridor unchanged at plus 2.5 percentage points and minus 7.5 percentage points around the policy rate.
The committee reaffirmed its commitment to using CBL bills and liquidity management operations to control excess liquidity and enhance policy transmission, and signaled it stands prepared to act if inflationary pressures intensify or financial stability risks emerge.
"Stability today is the foundation for growth," the governor said.
The next Monetary Policy Committee meeting is scheduled for July 15, when policymakers will reassess economic conditions and determine the future direction of monetary policy.
