The Central Bank of Tunisia Maintains Its Key Interest Rate at 8%

The Board of Directors of the Central Bank of Tunisia (BCT) met on February 5, 2025, to review economic conditions and inflation trends.

According to the latest BCT forecasts, inflation continues to decline, reaching 6.2% in December 2024, compared to 6.6% in November and 8.1% a year earlier. On an annual average, inflation fell from 9.3% in 2023 to 7% in 2024. Core inflation, excluding fresh food products and regulated prices, also declined, reaching 5.5% in December compared to 5.8% in November 2024 and 8.5% in December 2023. This trend is mainly attributed to the significant drop in prices of freely priced processed food products, which fell to 1.1% in December 2024 from 14.5% a year earlier, due to declining international commodity prices, particularly olive oil (-9.8% in December 2024).

However, the increase in fresh food prices, observed since September 2024, slightly eased in December. Inflation in this segment decreased from 14.1% in November to 12.6% in December, driven by a slowdown in the rise of fresh vegetable prices. Conversely, the prices of poultry and red meat continue to face upward pressure.

On the external front, the strong performance of the services balance and factor income supported the current account and mitigated the impact of the widening trade deficit. The current account deficit narrowed to -2,748 MTD (or -1.7% of GDP) in 2024 from -3,484 MTD (or -2.3% of GDP) in 2023. Excluding energy, the current account registered a surplus of +8,122 MTD in 2024 compared to +6,182 MTD in 2023.

As a result of this improvement, foreign exchange reserves were replenished, reaching 27,332 MTD (121 days of imports) at the end of December 2024, before decreasing to 23,266 MTD (103 days of imports) as of February 4, 2025, due to the repayment of a significant installment of external public debt.

Given the persistent risks to inflation prospects, the BCT Board of Directors decided to keep its key interest rate unchanged at 8%, reaffirming its commitment to supporting the ongoing disinflation process.

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