Central banks across Africa, including Kenya and Nigeria, have raised interest rates to fight inflation and stabilize their economies.
Nigeria’s rate hit 18%, aiming to reduce high inflation after several hikes since 2022.
This move intends to make loans pricier and encourage savings, impacting living costs and goods’ affordability.
Kenya surprised many by boosting its policy rate by 50 basis points to 13%, its biggest increase in a decade, to control inflation and exchange rate issues.
Similarly, the Bank of Central African States upped its rate to 3.5%, and South Africa’s Reserve Bank lifted its repurchase rate to 8.25%, hinting at a slowdown in its tightening cycle started in 2021.
Other countries like Mauritius, the Seychelles, Egypt, Mozambique, and Zimbabwe made policy adjustments due to unique economic pressures.
Egypt raised its borrowing rate to 19.25% due to high inflation. Mauritius maintained a 4.5% rate owing to low inflationary pressure. Seychelles faced deflation, setting a record low rate of 2%.
Angola increased its main interest rate from 17% to 18% due to rising inflation. Inflation rose to 16.58% year-on-year in October from 15.01% in September.
Later, Angola cut the rate to 18.0% from 19.5% after recording the lowest inflation rate in five years in December, forecasting end-of-year inflation above 19%, against an earlier 14% target.
African central banks adjust policies to manage inflation, support growth, and tackle currency depreciation amid global disruptions.
Varied policy actions reflect Africa’s diverse economic conditions. Central banks play a crucial role in seeking stability and growth.