(Business in Cameroon) – The Bank of Central African States (BEAC) raised its liquidity offer to a record CFA260 billion on September 24, 2024. This move comes as banks in the six CEMAC countries face increasing demand for funds. Despite the large offer, it still fell short of meeting bank requests, which reached CFA457 billion—175.7% of the available supply.
In comparison, just a week earlier, on September 17, banks had requested over CFA500 billion when BEAC offered CFA200 billion. With such high demand, BEAC may consider increasing liquidity in the coming weeks to help banks better support the economies of CEMAC nations.
This surge in demand follows BEAC’s decision to inject more liquidity after a period of tight monetary control, which began at the end of 2021. The policy aimed to curb inflation, which had soared to 20%. However, as inflationary pressures eased in early 2024, BEAC slightly relaxed its restrictive monetary stance and resumed liquidity injections in June 2024 after more than a year of suspension.
Despite this, BEAC remains cautious. At its Monetary Policy Committee meeting in Yaoundé on September 23, 2024, the central bank decided to keep its key interest rates unchanged. These rates had been steadily increased starting in late 2021, tightening credit conditions for banks.
While bank demand for liquidity continues to grow, BEAC has been alternating between injecting and withdrawing liquidity from the system. This careful balancing act is intended to keep inflation under control, which is forecasted to drop to 4.2% in 2024 from 5.6% in 2023, though it remains above the CEMAC’s 3% target.
With this measured approach, BEAC aims to bring inflation back in line with regional standards by 2025, according to Yvon Sana Bangui, the central bank’s governor.
