The Monetary Policy Committee (MPC) of the Bank of Sierra Leone(BSL) met on September 28 and agreed to increase monetary policy rate from 9.5 percent to 10.5 percent. This is an increase by 100 basis points. The decision was reached in the absence of the Governor Dr.KaifalaMarah.
The committee took into consideration assessments of the economy and the global economic outlook. The global economy is expected to grow by 3.1 percent in 2016. The country’s Gross Domestic Product (GDP) is projected at 4.9 percent in 2016 despite the low commodity prices “up from an earlier projection of 4.3 percent.” “This is driven largely by increase in export receipts from iron ore and favourable developments in agriculture, construction, manufacturing, services and trade sectors,” the statement reads.
The depreciation of the Leone especially to the Dollar was also discussed and ‘underscore the need for the Bank to continue to be proactive and use its policy instruments to contain inflation.’ The committee also considered the increase in inflation from 8.77 percent in March to 10.84 percent in August. And this increase reflected in both food and non-food items.
“The MPC also discussed the introduction of the overnight deposit facility and the overnight lending facility. These facilities offer commercial banks the opportunity to place funds with the Bank and obtain funds from the Bank on an overnight basis,” according to the statement.
“The MPC also weighed the risks to growth outlook and the assessment was that risks to the inflation outlook outweighed those to growth,” the release says.
These considerations led the committee to vote to increase the MPR by 100 basis point from 9.5 percent to 10.5 percent.
Monday October 10, 2016