Bank of Sierra Leone raised its benchmark interest rate by 100 basis points to 17% to curb price pressures in the West African economy and provide cushion for the local currency.

“Inflationary pressures remained elevated, and it is expected to remain high throughout the remaining months of 2022,” Governor Kelfala Kallon said in a statement on the bank’s monetary policy committee decision.

“The global economic uncertainty created by the pandemic and the Russian-Ukraine War provided incentives for economic agents to fly to safety by holding US dollar denominated assets.”

Inflation eased to 28.15% in August from 29.47% in July. The leone has weakened by 29.6% this year to the dollar, the second-worst performing currency in Africa after the Ghanaian cedi.

The central bank projects gross domestic product growth at 3.6% this year and 3.4% in 2023 as price factors impact output. It called for fiscal restraint after the budget deficit widened to 1.84 billion leones in the second quarter from 1.33 billion leones in the first three months.

The Bank of Sierra Leone increased its standing lending facility rate and the standing deposit facility rate by 100 basis points each to 20% and 11% respectively, according to thee statement.

Source: Bloomberg