"African Economies Reassess Interest-Rates Path With Eye On Trump"

" African Economies Reassess Interest-Rates Path With Eye On Trump \r\nCentral banks in South Africa, Egypt and several other African nations will pronounce on interest rates over the course of the next month and stake out different approaches to counter the risks posed by US President Donald Trump\u2019s protectionist policies.\r\n\r\n\u201cThe common theme across these countries is expected to be a cautious approach to monetary policy, as central banks navigate the delicate balance between controlling inflation and fostering economic growth,\u201d said EY Africa Chief Economist Angelika Goliger. \u201cThis balancing act is influenced by a myriad of factors, including domestic economic conditions and global economic trends \u2013 which are now much more at the forefront in terms of foreign and trade policy coming out of the US \u2014 and its global impacts.\u201d\r\n\r\n <img class=\"alignnone wp-image-1685815 size-medium\" src=\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429806383-555x691.jpg\" sizes=\"(max-width: 555px) 100vw, 555px\" srcset=\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429806383-555x691.jpg 555w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429806383-822x1024.jpg 822w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429806383-120x150.jpg 120w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429806383-1234x1536.jpg 1234w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429806383-91x113.jpg 91w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429806383-230x286.jpg 230w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429806383-744x926.jpg 744w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429806383.jpg 1240w\" alt=\"\" width=\"555\" height=\"691\" \/> \r\n\r\nThere has been a marked escalation in Trump\u2019s rhetoric and tariff measures against neighbours, allies and competitors alike over recent weeks, which threatens trade and creates uncertainty.\r\n\r\nThe Federal Reserve\u2019s projected rate path that will be revealed Wednesday will also feature in the central banks\u2019 deliberations, as higher-for-longer interest rates in the US could strengthen the dollar and put African currencies under pressure.\r\n\r\nThese are the key considerations for African monetary policy committees:\r\n Inflation trajectory \r\nAfter three straight 25 basis-point interest-rate cuts to 7.5%, South African policymakers will probably stand pat on Thursday, Goliger said.\r\n\r\nGlobal uncertainties that influenced the MPC\u2019s decisions to cautiously reduce borrowing costs have intensified since its last rate move on January 30.\r\n\r\nSouth Africa\u2019s annual inflation also quickened for three straight months before holding steady in February at 3.2%. Average inflation expectations in two years\u2019 time \u2014 a measure the MPC uses to inform its decision-making \u2014 edged up to 4.7% in the first quarter from 4.6% previously. The panel prefers to anchor expectations at the midpoint of its 3% to 6% target range.\r\n\r\n <img class=\"alignnone wp-image-1685817 size-medium\" src=\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429814868-555x337.jpg\" sizes=\"(max-width: 555px) 100vw, 555px\" srcset=\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429814868-555x337.jpg 555w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429814868-1024x623.jpg 1024w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429814868-150x91.jpg 150w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429814868-186x113.jpg 186w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429814868-230x140.jpg 230w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429814868-744x452.jpg 744w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429814868.jpg 1240w\" alt=\"\" width=\"555\" height=\"337\" \/> \r\n\r\nBorrowing costs are also expected to remain on hold in at least five smaller economies, including Eswatini, Lesotho and Namibia whose currencies are pegged to the rand. In addition, rates are likely to be kept unchanged in Ghana, where inflation is sticky, and Botswana, where it is expected to creep up.\r\n\r\nAngola, where inflation remains high, on Tuesday maintained its key rate at 19.5% for a fifth time in a row. It may start to cut later in the year, as price growth is expected to ease, Goliger said.\r\n Scope to ease \r\nEgypt, while keeping an eye on global developments, will probably lower borrowing costs on April 17. Its inflation rate almost halved to 12.8% in February, as the effects of a foreign-currency crunch that fed parallel-market demand for dollars finally wore off.\r\n\r\nGoldman Sachs Group Inc. foresees the central bank cutting its base rate \u2014 now at 27.25% \u2014 by 300 to 400 basis points, with the possibility of officials calling a special meeting to start easing before then. A reduction would be the first in almost five years and help support economic growth.\r\n\r\n <img class=\"alignnone wp-image-1685816 size-medium\" src=\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429813965-555x336.jpg\" sizes=\"(max-width: 555px) 100vw, 555px\" srcset=\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429813965-555x336.jpg 555w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429813965-1024x619.jpg 1024w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429813965-150x91.jpg 150w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429813965-187x113.jpg 187w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429813965-230x139.jpg 230w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429813965-744x450.jpg 744w, https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2025\/03\/429813965.jpg 1240w\" alt=\"\" width=\"555\" height=\"336\" \/> \r\n\r\nMozambique and Kenya, where inflation remains low, will probably also cut interest rates \u2014 as Guinea and Morocco did Tuesday.\r\n\r\nInflation across most African nations has been easing steadily since late 2023, and is actually quite low and stable in some countries, including Kenya and Morocco, said David Cowan, Citigroup Inc.\u2019s chief Africa economist. He noted some exceptions, like Ethiopia, Ghana and Nigeria, but even in these countries inflation is expected to cool this year.\r\n\r\n\u201cWhat this means is that across most of the continent we are now in a monetary policy easing cycle,\u201d Cowan said. Even so, \u201cthe process will not be straight forward. They may cut at one meeting and then leave it for several meetings. Or they may do very cautious consecutive cuts depending on their individual circumstances and the starting point for interest rates,\u201d he said."

"African Economies Reassess Interest-Rates Path With Eye On Trump"

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