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Recent Challenges to the Conduct of Monetary Policy in the WAEMU: WAEMU
Author:
Alain Feler
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and
Lawrence Norton
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Series:
Selected Issues Papers
Volume/Issue:
Volume 2024: Issue 013
Language:
English
Publication Date:
17 May 2024
DOI:
https://doi.org/10.5089/9798400274121.018
ISBN:
9798400274121
ISSN:
2958-7875
Pages:
19
Keywords:
BCEAO; WAEMU; monetary policy; CFA franc; BCEAO purchase; conduct of monetary policy; viability challenge; BCEAO refinancing; FX reserve; Liquidity; Central bank policy rate; Securities; Financial sector stability; International reserves; Global; West Africa
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IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries. It is based on the information available at the time it was completed.
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This paper discusses recent challenges in BCEAO monetary policy, from a recent spike in inflation, the persistent erosion of external reserves, and strains in the regional financial market. In response to these shocks, the BCEAO operated via both policy rates and liquidity management, including by shifting from fixed to variable rate auctions. The paper finds that the conduct of monetary policy became progressively more constrained by financial stability and external viability challenges, arguing for enhanced monetary-fiscal policy coordination to help the BCEAO meet its reserves objectives.
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Cover Selected Issues Papers
Selected Issues Papers
Publisher:
International Monetary Fund