The Central Bank of West African States (BCEAO) left its benchmark marginal lending rate unchanged at 4.0 percent and said economic activity in the West African Monetary Union (WAMU) continues to improve and inflation is expected to slow down in the fourth quarter.
The central bank, which cut its rate by 25 basis points in June, said inflation should slow to 2.5 percent by the end of December due to a better supply of grain and inflationary expectations are broadly in line with the bank's price stability objective.
"Average annual inflation is expected to be 2.3 percent in 2012 against 3.8 percent in 2011. In a horizon of 24 months, the rate is projected at 2.4 percent," the bank said in a statement issued following the monetary policy committee's fourth meeting of the year on Dec. 7.
The annual inflation rate rose to 2.7 percent end-September from 2.1 percent in June due to an upward adjustment in fuel prices and some member states raised prices of cereals and fish products.
The bank said economic activity continued to strengthen, especially in secondary and tertiary sectors, with industrial production up 3.0 percent in the third quarter after a rise of 3.2 percent in the second.
Monetary conditions were also favorable with the weekly weighted average interbank transactions rate at 4.13 percent in the third quarter, down from 4.24 percent in the second quarter.
The central bank implements the monetary policy of the West African Monetary Union, which comprises Senegal, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Togo and Benin.