By Vuyani Ndaba

JOHANNESBURG – Sub-Saharan Africa’s central banks are expected to keep their interest rates stable in the days ahead. The first two countries will be Nigeria and Kenya. Ghana would follow at the end.

According to median forecasts, analysts for Nigeria and Kenya expected rates to remain at 11.50% and 7.0% in a poll conducted over the week. Next week, Ghana is expected to leave borrowing costs at 14.50%

Razia Khan from Standard Chartered stated, “In Nigeria FX policies will be the primary focus of MPC meetings, amid recent oil prices strength.”

Khan said that while we anticipate the Central Bank of Kenya keeping its policy rate at 7.00%, given rising inflation, policy normalization will be a major focus of the press conference.”

Since 2015, interest rates at these central banks are relatively low. These central banks’ interest rates have been low since 2015, when South Africa and Ghana began to tighten. South Africa is expected to increase its rate on Thursday, to 4.00%. [ECILT/ZA]

Financial Derivatives noted in a memo that increased inflationary pressures could cause most African central banks to adopt an expansionary monetary strategy, in line with some of the advanced economies.

Policymakers in the United States expect as many as three quarter-percentage-point rate increases this year, starting in March, with more likely in 2023 and 2024.

This will likely attract capital flows towards the dollar and possibly weaken local currencies, thereby igniting inflation.

Therefore, many respondents didn’t expect rates would stay the same.

Leeuwner Estruysen of Oxford Economics anticipates that the Bank of Ghana will raise its policy rate by 100bps at its next meeting to meet inflation expectations.

Esterhuysen predicted that economic momentum from the second half 2021 would spillover into this year. This supports his prediction for a rate increase.

Esterhuysen stated that Ghana also wanted to avoid the Fed’s expected end-March rate increase in order to stop capital outflows.

According to Reuters, rates in Nigeria, Ghana and Kenya will increase by September to 15%, 7.50%, and 12.50% respectively.

After a challenging 2021, the coronavirus pandemic, growth in Nigeria, Ghana and Kenya was forecast to rebound. These economies were expected to grow 5.1%, 5.0%, and 2.8% respectively.

(For more stories, see the Reuters economic poll: