Despite the downward inflation trend, the
Other decisions of the MPC included implementation of strategies to increase public sensitization for the greater use of digital/electronic payments, enhance loan recovery to address the structural liquidity problem, and promote the take-up of investment in CBL's financial instruments from the diaspora.
It should be noted that these decisions of the MPC were informed by developments in the global and domestic economies.
The MPC noted the projected contraction of 3.5% in the global economy, which represents a negative 1.4 percentage point improvement more than the previous contraction of 4.9% projected in the
Accordingly, global economic growth for 2021 is projected at 5.5%, on account of anticipated containment of COVID-19 and other policy measures.
In addition, the MPC observed that global commodity prices improved in the last quarter of 2020. Inflation remained subdued in most advanced economies but rose in emerging markets and developing countries, including sub-Saharan Africa, and expected to decline in emerging and developing economies in 2021.
Monetary policy rates in advanced economies were relatively stable and remained broadly unchanged within most of the countries in the
Domestic Macroeconomic Developments
The domestic economy is projected to re-bound in 2021 based on anticipated improvements in the international prices of the country's major export commodities. The moderation in inflation, from 15.5% to 12.5% in the fourth quarter of 2020, is projected to continue to 12.3% in the first quarter of 2021, with a band of +/- 2 percentage points. Similarly, in the fourth quarter of 2020, the deficit in
The MPC also noted that the relative stability in the Liberian dollar was reflective of increased net foreign exchange inflows and weak domestic demand, while emphasizing that the recovery in domestic demand is anticipated to gradually exert pressure on the exchange rate.
Overall, the foregoing economic developments prompted the MPC to opt for retaining the monetary policy rate, while challenging the CBL's Management to embark upon extensive sensitization to engender the take-up of digital financial services and strengthen policies to support lending to the agricultural sub-sector with the hope of improving
The MPC stressed the need for CBL to work with commercial banks by designing appropriate strategies to reduce non-performing loans with the aim of easing the liquidity demand on the financial sector and the economy at large.
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