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Beac tightens monetary policy, further reduces liquidity injections to banks

Beac tightens monetary policy, further reduces liquidity injections to banks
  • Comments   -   Tuesday, 12 April 2022 12:54

(Business in Cameroon) - The Bank of Central African States (Beac) announced last April 5 that it has further reduced the volume of liquidity it makes available to banks within the Cemac region. Beac said the amount now stands at CFA160 billion, against CFA180 billion on March 29, 2022, and CFA250 billion in 2020 and 2021.

On April 11, 2022, the central bank also launched a long-term liquidity operation that aims to collect CFA50 billion from over-liquid banks. The results of this operation are still awaited. Financial experts believe that through this new step, Beac wants to tighten its restrictive monetary policy. At the end of its first Monetary Policy Committee (MPC) session for 2022, last March 28, the bank raised two of its main policy rates (the Tender Interest Rate and the Marginal Lending Facility Rate).  This strategy is aimed at making liquidity more expensive for commercial banks, thus increasing the cost of bank credit. As a result, access to credit will be restricted, money creation within the region will drop and inflation will follow the same trend. Inflation in Cemac is forecast at 3.6% in 2022, up 2.6% YoY and above the 3% threshold allowed in the region.

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