Freetown – In a significant move to bolster economic growth and maintain price stability, the Bank of Sierra Leone (BSL) has announced a sharp reduction in key interest rates, citing a steady decline in inflation and improvements in macroeconomic conditions.
Following its quarterly meeting on July 24, 2025, the Monetary Policy Committee (MPC) of the central bank cut the Monetary Policy Rate (MPR) by 2 percentage points, bringing it down to 21.75%, effective July 29. The Standing Lending Facility Rate (SLFR) was lowered to 23.75%, and the Standing Deposit Facility Rate (SDFR) to 14.25%.
The decisions, approved by the BSL’s Board of Directors on July 28, aim to support private sector lending, reinforce fiscal consolidation, and stimulate economic activity amidst easing inflationary pressures.
Inflation Cooling Off
According to the BSL, headline inflation dropped to 7.10% in June 2025, down from 7.55% in May and significantly lower than the 13.8% recorded in December 2024. The declining inflation trend is also reflected in falling Treasury bill rates, with the 364-day bill rate falling to 15.77% in mid-July, compared to 20.40% a month earlier.
“The balance of risks to the inflation outlook has shifted downward,” said Dr. Ibrahim L. Stevens, Governor of the Bank of Sierra Leone, in an official statement. “We are therefore adopting a more supportive monetary policy stance to align with market conditions and enhance private sector access to credit.”
Macroeconomic Improvements
The country’s economic outlook has also improved, with real GDP growth projected to reach 5.5% in 2025, up from 4.4% in 2024. Although the Composite Index of Economic Activity (CIEA) indicates a slight slowdown in the second quarter of the year, overall economic indicators remain positive.
The exchange rate has remained relatively stable, with the Leone holding steady against the US Dollar. This, according to the MPC, is due to coordinated monetary and fiscal policies that have helped restore market confidence.
Challenges Remain
Despite the positive outlook, the MPC cautioned that global economic uncertainties — including geopolitical risks and volatile commodity prices — continue to pose challenges to Sierra Leone’s economic stability.
Private sector credit growth experienced a slight dip, falling from 3.72% of GDP in March 2025 to 3.69% in May. The MPC noted this as a concern and cited the interest rate cuts as a measure to reverse the trend and spur domestic investment.
Outlook and Policy Direction
The central bank reaffirmed its commitment to price stability and said it would continue monitoring macroeconomic developments closely. The MPC pledged to adjust its monetary stance before the next scheduled meeting in September 2025, should the need arise.
With inflation falling, debt markets improving, and growth prospects rising, the central bank’s latest decision is expected to provide relief for borrowers and offer a much-needed boost to Sierra Leone’s private sector.
By Derick Snell
