The Central Bank of West African States, which sets monetary policy for eight nations, lowered its main interest rates for the first time in nine months as political conflict in Mali curbs growth in the region and inflation slows.
The marginal lending facility rate was reduced by a quarter of a percentage point to 3.75 percent, while the minimum open market rate was cut to 2.75 percent from 3 percent, the bank said in a statement released in the Senegalese capital, Dakar, today.
Inflation, which reached 2.2 percent in January, may ease to 1.5 percent in the fourth quarter as global growth slows and food prices moderate, the bank said. Policy makers also considered the impact on the region from the crisis in Mali, where French and local troops, along with an African Union-backed regional force, are trying to oust Islamist insurgents in the north of the country.
Growth in the region may accelerate to 6.5 percent this year from 5.8 percent in 2012, the bank said.
Ivory Coast continues to “recover after a decade of stagnation while other countries will probably display a more subdued economic performance, if not negative in the case of Mali,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd., said in an e-mailed response to questions before the decision.
Growth in Ivory Coast, the biggest economy in the group, is expected to reach 7 percent this year, according to the International Monetary Fund, while the government projects 9 percent expansion.
Togo, Benin, Niger and Burkina Faso are also members of the monetary union, along with Senegal, Mali and Guinea Bissau. The euro-pegged common currency, the CFA franc, has weakened 1.2 percent against the dollar this year and traded at 506.4399 as of 3 p.m. in Dakar.