Monetary policy is defined by the Monetary Policy Committee (MPC) of the BCEAO, which includes:

• The Governor of the Central Bank,

• the Vice-Governors of the Central Bank,

• a member proposed by each of the Governments of the member States of the UMOA and appointed by the Council of Ministers,

• a member appointed by the State ensuring the guarantee of the convertibility of the common currency,

• and four other members from the member States of the UMOA, appointed intuitu personae by the Council of Ministers.

Its implementation is carried out by the Central Bank of West African States (BCEAO), which is the issuing institution common to the eight (8) member States of the West African Monetary Union (UMOA).

The primary objective of monetary policy is to ensure price stability. The current framework for managing money and credit relies on market mechanisms and indirect liquidity regulation instruments, notably the system of required reserves and interest rates.

The last modification of the framework dates back to December 2023. The Monetary Policy Committee (MPC) of the Central Bank of West African States (BCEAO) decided, following its meeting held on December 16, 2023, to raise the Central Bank's key rates by 25 basis points. Thus, the main key rate at which the Central Bank lends its resources to banks increases from 3.25% to 3.5%, and the marginal lending rate rises from 5.25% to 5.5%.

This decision comes in a context of rising uncertainties at the regional level, persistent inflationary pressures, increasing financial conditions on international markets, and reduced mobilization of external resources.

The increase in key rates aims to anticipate and contain the impact of these risk factors on the macroeconomic outlook of the Union.

The required reserves ratio applicable to the banks of the Union remains unchanged at 3.0%.

Changes in BCEAO key rates since 2013

Source : BCEAO