The second ordinary session of the Monetary Policy Committee of the Central Bank of West African States (BCEAO) opened this Wednesday in Dakar. It is taking place in an international context marked by significant uncertainty due to tensions in the Middle East.

Significant pressures are already being felt on energy prices, and disruptions have been recorded in supply chains, particularly with the closure of the Strait of Hormuz. The WAEMU region is not spared.

“Within the Union, the first effects of this crisis are beginning to be felt, linked to the rise in fuel prices that occurred between March and May 2026 in several countries. The impact on inflation remains limited for the time being,” said Jean-Claude Kassi Brou, Governor of the BCEAO.

Thus, at the end of the first quarter, the inflation rate stood at -0.2%, compared to -0.8% three months earlier. For the remainder of 2026, the upward trend in inflation could continue due to the negative effects of the crisis in the Middle East, the Governor warned.

As for economic growth, it stood at 6.1% of GDP in the first quarter of 2026. It was at 6.5% in the previous quarter.

As for public finances, "the data communicated by the States show a continuation of budgetary consolidation, despite the risks," says the Governor of the BCEAO.

The budget deficit narrowed to 4.1% of GDP in the first quarter of 2026, after 4.3% a year earlier. "However, the outlook for 2026 could be affected by the efforts undertaken by states to contain the negative effects of the crisis in the Middle East," he noted.

The Union's external accounts, meanwhile, continue to improve due to the increase in hydrocarbon and gold exports and the mobilization of external resources by Member States.

However, for the year 2026, "the profile of external accounts should be impacted by the less favorable evolution of the terms of trade following geopolitical tensions", warns Jean-Claude Kassi Brou.

Regarding the money market, conditions have eased due to improved bank liquidity and the recent cut in the Central Bank's key interest rates, he said. The one-week interbank interest rate fell by 68 basis points to 4.26%.