West Africa’s Silent Monetary Tightening Forces Banks to Hoard Liquidity

• BCEAO holds policy rate at 3.5%, but liquidity conditions tighten
• WAEMU banks triple reserves amid growing interbank stress

Cotonou, Benin – The Central Bank of West African States (BCEAO) has kept its main policy rate unchanged at 3.5% since December 2023. On the surface, this suggests stability, with inflation easing to 2.1% in February and GDP expanding 6.2% in 2024, with 6.5% forecast for 2025. But market signals tell a different story: monetary conditions are quietly tightening, and liquidity is becoming more expensive.