CBG Holds Policy Rate At 14% As Governor Saidy Flags Rising Transport, Energy Risks

By Pa Modou Cham

Central Bank Governor Buah Saidy has announced the decision of the Monetary Policy Committee to maintain The Gambia’s Monetary Policy Rate at 14 percent, warning that despite recent moderation in inflation, the economy continues to face significant risks from transport costs, energy prices and global uncertainty.

Speaking as he presented the MPC’s latest assessment on 20 August 2026, Governor Saidy said the Committee had adopted a cautious approach after weighing stronger domestic economic activity against persistent inflationary pressures.

“The combination of stronger domestic economic activity, moderating headline inflation, elevated underlying and non-food price pressures, and persistent external uncertainties warrants a cautious monetary policy stance,” Saidy said.

The decision means the MPR remains unchanged at 14 percent. The Committee also maintained the required reserve ratio for commercial banks at 13 percent, the standing deposit facility at 5 percent, and the standing lending facility at 15 percent.

Inflation falls, but pressure remains

Saidy’s announcement comes as headline inflation showed some improvement in July.

According to the figures presented by the Governor, headline inflation declined to 7.0 percent in July, down from 7.6 percent in June and 7.5 percent in May, reflecting easing food-price pressures.

Food inflation also declined to 5.8 percent, from 6.6 percent in June.

But Saidy warned that the improvement in headline inflation should not be interpreted as the end of inflationary pressures.

Non-food inflation increased to 8.9 percent, while transport inflation accelerated sharply to 16.5 percent, from 14.5 percent in June.

“Inflation remained above the Central Bank’s implicit target of 5.0 percent, indicating that overall price pressures remain elevated in the economy,” Saidy said.

He also pointed to continued pressure beneath the headline figure.

“Upside risks to the inflation outlook remain significant,” Saidy said, noting the persistence of core inflation alongside strong transport and other non-food price pressures.

Energy and transport remain key threats

The Governor said developments in the international economy continue to affect The Gambia through commodity prices, tourism, remittances, trade and financial conditions.

“In particular, elevated energy and transport costs could transmit to domestic prices through higher imports, production, and distribution costs,” Saidy said.

The warning comes as global inflationary pressures have resurfaced.

The IMF projects global headline inflation at 4.7 percent in 2026, while energy prices remain about 25 percent above pre-war levels. The MPC said renewed geopolitical escalation could push commodity prices higher, particularly for developing countries dependent on imported food and energy.

Saidy said the global economy remains resilient but vulnerable.

“The global economy continues to demonstrate resilience despite persistent downside risks from geopolitical tensions, trade uncertainty, and disruptions to global energy and supply markets,” he said.

Economy still growing strongly

Despite the inflation risks, Saidy delivered a positive assessment of the domestic economy.

The Central Bank has raised its 2026 real GDP growth forecast to 5.8 percent, up 0.1 percentage point from its previous forecast.

The revised outlook reflects “stronger-than-anticipated economic activity,” supported by continued momentum in services and tourism, public and private investment, and remittance inflows, Saidy said.

The Gambia recorded provisional real GDP growth of 5.7 percent in 2025, with tourism, construction, trade, financial services, private investment and remittances contributing to the expansion.

Saidy said the growth outlook had strengthened despite the difficult external environment.

“On the domestic front, economic activity remains resilient, and the growth outlook has strengthened,” he said.

CBG watching external position

The Governor also highlighted developments in the country’s external accounts.

The current account deficit widened to US$34.6 million, equivalent to 1.3 percent of GDP, in the second quarter of 2026, compared with US$29.7 million in the previous quarter. The deterioration was partly attributed to a seasonal decline in tourism-related services during the lean period.

At the same time, exports recorded a significant increase.

Total exports rose by 21.9 percent to US$171 million, driven by higher re-exports and exports of edible fruits and oil seeds, while imports declined by 2.6 percent to US$413.5 million.

Private remittances also strengthened, reaching US$265.5 million in the second quarter, compared with US$219 million during the corresponding period of 2025.

Saidy said the foreign exchange market remained stable and active, supported by improved foreign currency supply.

“The Dalasi remained broadly stable against major currencies,” he said, while noting that the Central Bank maintained an adequate international reserve buffer to cushion the economy against external shocks.

Gross official reserves stood at US$563.9 million at the end of July, equivalent to 4.3 months of prospective imports of goods and services.

CBG committed to inflation target

Saidy said the Central Bank would continue to monitor both domestic and international developments closely.

“The Committee remains committed to bringing back inflation to target in the medium-term,” he said.

“We will continue to monitor domestic and external developments and stand ready to respond promptly should conditions call for action.”

The next MPC meeting is scheduled for November 25, 2026, with the policy decision announcement expected on November 26.