By: Fayia Jr. Moseray
The Bank of Sierra Leone (BSL) has announced a reduction in key policy rates following its emergency Monetary Policy Committee (MPC) meeting on July 24, 2025, citing easing inflationary pressures and relative exchange rate stability.
In a statement released by the Bank, the MPC confirmed that the Monetary Policy Rate (MPR) has been cut by 2 percentage points to 21.75%, while the Standing Lending Facility Rate (SLFR) and Standing Deposit Facility Rate (SDFR) were each reduced by 3 percentage points, bringing them to 23.75% and 14.25%, respectively.
These strategic adjustments to monetary policy took effect on July 29, 2025, following approval by the Bank’s Board of Directors.
This significant move by the Board comes against the backdrop of headline inflation easing from 7.55% in May to 7.10% in June 2025. Additionally, there was a decline in the Treasury Bill rate, improved fiscal consolidation efforts, and sustained exchange rate stability. The Leone/US Dollar exchange rate remained relatively stable, supported by fiscal and monetary coordination, as well as stronger market sentiment.
Despite these positive developments, the MPC noted some challenges, including a slowdown in economic activity during the second quarter of 2025 and a marginal dip in private sector credit, which decreased from 3.72% of GDP in March to 3.69% in May.
The BSL’s Monetary Policy Committee emphasized that the rate cuts aim to stimulate private sector credit and investment while maintaining price stability. The Committee also acknowledged that, although global risks are diminishing, uncertainty remains. As a result, it stressed the need for a cautious yet responsive monetary stance across financial institutions, both locally and globally.
“The balance of risks to the inflation outlook is tilted to the downside,” the Committee stated, while underscoring its willingness to adjust the policy stance further before the next scheduled meeting in September if market conditions change significantly.
Economic experts view this decision by the Bank of Sierra Leone as a critical step in strengthening the country’s macroeconomic and microeconomic foundations, offering support to both the private sector and overall economic growth.