## Enhancing Monetary Policy Transmission in Algeria

_Selected Issues Papers, October 3, 2025_

## Source details

**Canonical URL:** [Enhancing Monetary Policy Transmission in Algeria](https://www.imf.org/en/publications/selected-issues-papers/issues/2025/10/03/enhancing-monetary-policy-transmission-in-algeria-570934)

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## Bibliographic details
- Authors: Gian Plebani, William Gbohoui
- Published: October 3, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229026376.018

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### Summary
- Algeria is actively pursuing reforms to modernize its monetary policy framework, with a focus on enhancing the role of interest rates in achieving price stability.
- The new monetary and banking law provides the necessary operational and organization tools while the authorities are improving the capacity in macroeconomic forecasting.
- This paper analyses the monetary policy transmission in Algeria.
- The results suggest that the interest rate channel is relatively weak as the BA focuses on liquidity operations.

### Key findings
- Interest rate channel is relatively weak.
- BA focuses on liquidity operations rather than interest rate tools.
- Capacity in macroeconomic forecasting is being improved.
- The new monetary and banking law provides operational and organizational tools to support modernization.

### Policy recommendations
- Shift focus toward interest rate tools to strengthen the interest rate channel.
- Advance financial sector reform to support monetary policy transmission.
- Enhance central bank independence to improve monetary policy effectiveness.
- Continue building macroeconomic forecasting capacity to support policy decisions.

### Subjects and keywords highlighted
- Asset and liability management
- Central bank policy rate
- Central Banks
- Financial services
- Liquidity
- Liquidity management
- Market interest rates
- Open market operations
- Keywords: Algeria; Central bank policy rate; Global; impediments of transmission; interest rate adjustment; interest rate channel; interest rate tool; interest rate tools; liquidity; Liquidity management; Market interest rates; market rate; monetary aggregates; monetary policy decision; monetary policy framework; monetary policy reaction function; monetary policy transmission; Open market operations; reaction function; Structural VAR

*Source: Enhancing Monetary Policy Transmission in Algeria, Selected Issues Papers (2025), by Gian Plebani and William Gbohoui.*

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2025/10/03/enhancing-monetary-policy-transmission-in-algeria-570934_