• BEAC raises key interest rates to support CFA franc
• Policy rate lifted to 4.75% amid falling foreign reserves
• Shift reverses earlier easing criticised by the IMF

The Bank of Central African States (BEAC) tightened monetary policy on Monday, raising two key interest rates to support the CFA franc and strengthen foreign exchange reserves.

The central bank of the six-member CEMAC bloc raised its main policy rate to 4.75% from 4.50% and raised its marginal lending facility rate to 6.25% from 6.00%.

The decision was taken by the monetary policy committee, chaired by Governor Yvon Sana Bangui, at a meeting in Yaounde. The bank pointed to a decline in the region’s foreign exchange reserves.

BEAC forecasts reserves will fall by 2.6% to 6,377.3 billion CFA francs ($11.44 billion) by Dec. 31, 2025, covering 4.2 months of imports of goods and services, down from 4.9 months in 2024.

It said this would translate into an external reserve coverage ratio of 67.0% for the currency, compared with 74.9% at the end of 2024.

The committee said tighter monetary conditions were needed to preserve the stability of the CFA franc and support the replenishment of foreign exchange reserves.

The deposit facility rate was left unchanged at 0.00%. Reserve requirement ratios were also maintained at 7.00% for sight liabilities and 4.50% for term liabilities.

The move marks a reversal from the BEAC’s earlier policy stance this year, when it cut rates to ease monetary conditions. That approach had drawn criticism from the International Monetary Fund.

In its annual assessment published in February 2025, the IMF urged a more cautious approach, warning that the region’s macroeconomic environment remained “fragile”. It noted that growth slowed in 2023 due to lower oil output, with real GDP expanding by just 2.5%.

The BEAC’s shift to a more cautious stance comes despite some improving indicators. Inflation is forecast to fall sharply to 2.2%, below the regional target of 3%, from 4.1% a year earlier.

Public finances are also expected to improve, with the budget deficit, excluding grants, narrowing to 1.4% of GDP from 1.6% in 2024. Economic growth, however, is projected to slow to 2.4% in 2025 from 2.7% the previous year.

Sandrine Gaingne