Bank of Cape Verde Raises 2026 Inflation Forecast to 2.7%
The Bank of Cape Verde (BCV) has raised its 2026 inflation forecast to 2.7%, up from an earlier estimate of 1.7%, citing rising import costs and escalating global geopolitical instability.
Global Shocks Driving Local Prices
In a statement released today, the central bank attributed the upward revision primarily to the volatility of international markets. “Inflation is expected to increase to 2.7%, reflecting primarily the evolution of import prices, particularly for energy and food products,” the BCV announced.
While Cape Verde saw inflation settle at 2.3% in 2025, previous projections suggested a cooling period ahead. However, the BCV noted that perspectives have darkened due to “the aggravation of geopolitical tensions,” specifically highlighting ongoing conflicts in the Middle East.
As a small, open economy that relies heavily on foreign goods, Cape Verde is particularly vulnerable to shifts in the global landscape. “External shocks tend to reflect on internal prices, putting pressure on domestic inflation,” the bank explained.
Economic Growth Moderate but Steady
The central bank also adjusted its outlook for national economic activity. While global growth among Cape Verde’s main trading partners is expected to be “more moderate,” the BCV slightly raised its own 2026 growth projection to 5%, up from the 4.8% forecasted last October.
This represents a slowdown compared to the 6.3% growth recorded in 2025, but the bank remains confident that the economy is performing near its full potential. Furthermore, Cape Verde’s financial cushion remains solid. The country’s net international reserves are projected to cover approximately 8.4 months of imports in 2026, which the bank describes as a “comfortable” level.
Interest Rates Held Steady
Despite the heightened inflation concerns, the BCV has decided to maintain its current monetary policy to preserve stability. The bank announced it will keep its benchmark interest rates unchanged until at least the next policy meeting on July 7.
The policy rate stays at 2.5%, while the standing lending facility and standing deposit facility remain at 2.75% and 2.25%, respectively.
Image: Pexels – Daniel Dan
