African Economies Prepare for Interest Rate Cuts Amid Easing Inflation

BREAKING NEWSSeptember 17, 2024 at 1:44 PM UTC

TLDR

Central banks in South Africa and Nigeria set to adjust interest rate policies as inflation eases, with South Africa expected to reduce benchmark rate by 25 basis points.
Economic stability in South Africa due to rand stability and decreasing oil prices influencing rate cut decision.
Other African countries, including Morocco, Mozambique, Kenya, Ghana, and Eswatini, likely to follow suit with smaller interest rate adjustments.

Central banks in two of Africa’s largest economies, South Africa and Nigeria, are set to shift their interest rate policies for the first time in years as inflation shows signs of easing.

The South African Reserve Bank is expected to reduce its benchmark interest rate by 25 basis points to 8%, as inflation appears to have eased to the midpoint of the central bank’s 4.5% target range. The stability of the rand and tapering oil prices will support this move.

Several other nations, including Morocco, Mozambique, Kenya, Ghana, and Eswatini, are expected to follow South Africa’s lead by making small interest rate cuts while countries like Angola are anticipated to keep rates unchanged alongside Nigeria.

Key Takeaways

Analysts cited by Bloomberg predict a cautious rate cycle for Africa’s central banks as they focus on maintaining positive real interest rates to prevent currency depreciation. Geopolitical risks, which may affect inflation expectations, are also a key factor influencing decisions across the continent. Meanwhile, Tanzania is also set to maintain its rates, as ongoing currency depreciation pressures inflation. Despite the Lesotho central bank typically following South Africa's lead due to its currency peg to the rand, it is expected to delay cutting rates until November, as inflation remains elevated at 6.7%.

Economy

Interest Rates

Inflation

South Africa

Nigeria

Central Banks