Bank of Sierra Leone Cuts Key Interest Rates as Inflation Eases

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In response to improving macroeconomic indicators, the Bank of Sierra Leone (BSL) has announced a significant adjustment in its monetary policy stance, following an emergency meeting of the Monetary Policy Committee (MPC) held on 24 July 2025.

According to an official statement issued by the central bank, the MPC recommended a 2 percentage point reduction in the Monetary Policy Rate (MPR), bringing it down to 21.75%, while also recommending a 3 percentage point cut in both the Standing Lending Facility Rate (SLFR) and the Standing Deposit Facility Rate (SDFR), now standing at 23.75% and 14.25%, respectively. These recommendations were duly approved by the BSL’s Board of Directors on 28 July 2025, and the new rates take effect from 29 July 2025.

The MPC’s decision was driven by several positive developments in the domestic economy, including:

A continued easing of inflationary pressures, with headline inflation dropping to 7.10% in June 2025, from 7.55% in May.

A marked decline in the 364-day Treasury Bill rate, from 20.40% in mid-June to 15.17% by mid-July, reflecting the government’s fiscal consolidation efforts.

A relatively stable Leone-to-US Dollar exchange rate, supported by coordinated monetary and fiscal policies.

Projections indicating a slight improvement in real GDP growth to 4.5% in 2025 from 4.4% in 2024, despite a minor slowdown in the BSL’s Composite Index of Economic Activity.

A modest decline in private sector credit, from 3.72% of GDP in March to 3.69% in May 2025.

The Committee emphasized that the decision to ease the monetary policy stance aims to stimulate private sector investment and credit growth while maintaining price stability. While global economic uncertainties persist, the MPC believes that the balance of risks to the inflation outlook is currently tilted to the downside.

The Bank reaffirmed its commitment to price stability and noted that it remains open to further monetary adjustments should market conditions change significantly ahead of the next scheduled MPC meeting on 25 September 2025.