Monetary policy is a complex and crucial concept for each country. Indeed, the key rate, an instrument of monetary regulation, is at the heart of the concerns of economists and players in the financial sector. But what is the key rate and what is its impact on a country’s economy?
The key rate, as explained by economist Noël Tshiani Mwadiamvita, is the interest rate set by the Central Bank, directly affecting economic activity. In essence, it is the rate at which commercial banks refinance themselves with the Central Bank, thus influencing the interest rates charged for loans to individuals, businesses and the State.
This key data therefore conditions the borrowing and financing conditions in a given country. When the key rate is high, as is currently the case in the Democratic Republic of Congo with a rate of 25%, it can slow down economic growth by making borrowing unaffordable for many economic players.
Compared to other countries with lower key rates, the DRC is in a unique situation that potentially hinders its economic development. While most central banks are lowering their rates to stimulate the economy, the Central Bank of Congo seems to be adopting an opposite strategy, thus jeopardizing the growth dynamic.
The debate sparked in the National Assembly between MP Godé Mpoyi and President Vital Kamerhe reflects an awareness of this problem. It is crucial that the country’s authorities consider reforms to adjust the key rate to economic reality and foster an environment conducive to growth.
In short, the management of the key rate is of major importance in building an effective monetary policy. By adapting this rate to the needs of the national economy, the DRC could catalyze its development and foster more favorable conditions for economic actors.