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The Bank of Algeria has just made two major decisions capable of giving a boost to the national economy. The first relates to the key rate and the second at the compulsory reserve rate. These two rates are revised downwards thanks to recent developments and medium -term perspectives of economic indicators deemed positive.
The decision to lower the key rate of 25 base points, fixing it at 2.75 % against 3 % previously, was therefore taken by the Monetary and Banking Council, said the Bank of Algeria (BA) in a statement made public Thursday, after a meeting of said Council in ordinary session, under the chairmanship of the governor of the Bank of Algeria, Salah Eddine Taleb.
The Monetary and Banking Council also decided to reduce the compulsory reserve rate by 100 basic points, bringing it to 2 % against 3 % previously, during this meeting which was devoted to “examining the economic and monetary economic situation, as well as monetary policy measures to be implemented”.
These are incentive rates that make credits cheaper and, therefore, encourage investors to use it, while stimulating consumption. This gives certain dynamism to the country’s economic machine and strengthens it, in the wake of the indicators noted by the Bank of Algeria. The latter said that “this relaxation aims to strengthen the capacity of the banking system to finance the national economy, in the light of recent developments and medium -term perspectives”.
The economic growth that the central bank described as “vigorous” during the first quarter of 2025 displays rates clearly above the average of many countries, including those called emerging countries. Economic growth recorded a rate of 4.5 % in the first quarter of 2025, compared to 4.2 % in the same period of 2024, thanks to “real growth in sectors excluding hydrocarbons of 5.7 % in the first quarter of 2025, against 4.3 % in the first quarter of 2024”, in accordance with the BA details.
The same document also reports on “moderate growth in the monetary mass in the broad sense”, evaluated at 3.81 % at the end of June 2025 compared to the end of December 2024. “This increase is mainly due to the increase in economy credits”, explained the BA, indicating that said credits have recorded “appreciable growth of 5.36 % in a semester (at the end of December 2024 and the end of June 2025), against a growth rate of 5.26 % throughout the year 2024 ”.
Another positive indicator, the inflation rate for which the Bank of Algeria has noted a clear deceleration. “In annual shift, overall inflation fell to 0.35 % in July 2025, a drop of 6 points compared to the same month of 2024. Average annual inflation also fell to 3.14 % in July 2025, against 6.12 % in July 2024,” it is specified. “The underlying inflation followed the same trend, going from 3.92 % in July 2024 to 2.58 % in July 2025, confirming the sustainable lower inflation trend, which remained for several consecutive months below the objective of monetary policy,” it added in the same text.
The Monetary and Banking Council will remain “attentive” to national and international economic developments and is ready to adjust its monetary policy instruments according to the objectives set, concluded the same document.