Economy

‘African central banks set to hold rates with focus on growth’

Date: Jan 24, 2022

Central banks in some of Africa’s biggest economies will likely look past high inflation and United States (US) policy tightening and hold interest rates over the coming weeks to shore up their recoveries from the Covid-19 stasis.

Since monetary policy makers on the continent last met, US consumer prices soared to a near four-decade high, setting the stage for the Federal Reserve to begin hiking interest rates as soon as March, which could lead to a sell-off of emerging-market currencies and dollar bonds in nations with high debt.

Price growth in Nigeria, Ghana, Angola and Zimbabwe that was already in double-digits has accelerated, stoked by rising food and oil prices.

Even so, most major central banks are set to prioritize supporting fragile economies over taming price growth by leaving key interest unchanged in the coming days.

Africa’s “growth recovery is a lot slower and weaker, and implies that central banks have to be a lot more cautious when it comes to the tightening,” said Yvonne Mhango, Renaissance Capital’s head of research for the continent.

She also cautioned that its nations lacked the resources to provide the level of fiscal stimulus that helped developed markets like the US recover faster.

--Moneyweb--

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