"BoG, other African Central Banks set to hold rates as currency risks weigh"

" BoG, other African Central Banks set to hold rates as currency risks weigh \r\n\r\nAfrican central banks meeting in the next three weeks are mostly set to hold interest rates while leaving hikes on the table, amid risks to their currencies from higher borrowing costs in advanced economies and their own domestic challenges.\r\n\r\nThe flurry of decisions from the monetary authorities will likely see South Africa, Egypt, Morocco and Ghana keep rates steady. Nigeria, Angola and Kenya are expected to confront currency weakness by lifting borrowing costs.\r\n\r\nMozambique\u2019s decision may offer some suspense with analysts viewing it as a toss up between a cut and hold.\r\n\r\nWhat Bloomberg Economics Says...\r\n\r\n\u201cThe Angolan kwanza and the Nigerian naira have devalued by around 40% in the year to date. Kenya\u2019s shilling has fallen by 16% and the South African rand is down by 10%. Weaker currencies are placing upward pressure on inflation. Central banks still seeking to rein in inflation are likely to hike policy rates.\u201d\r\n\r\n\u2014 \u00a0Yvonne Mhango, Africa economist\r\n\r\nAngola, Sept. 15\r\n \r\n \t BNA rate: 17% \r\n \t Inflation rate: 13.5% (Aug.) \r\n \r\nPolicymakers at Banco Nacional de Angola are set to raise interest rates to quell inflation, address a surge in money supply and defend the currency from further weakness, said Wilson Chimoco, an economist at Universidade Catolica de Angola.\r\n\r\nThe annual inflation rate in Africa\u2019s third largest oil producer climbed to 13.5% last month from 12.1% in July \u2014 its biggest monthly percentage increase in at least five years.\r\n\r\nInflationary pressures have intensified after the government stopped defending the kwanza in May and cut gasoline subsidies a month later, which almost doubled pump prices that had been among the cheapest in the world.\r\n\r\nMauritius, Sept. 15\r\n \r\n \t Key rate: 4.5% \r\n \t Inflation rate: 5.9% (Aug.) \r\n \r\nThe Bank of Mauritius will likely keep the key rate unchanged for a second straight meeting as base effects are expected to continue to support the downward trend in inflation.\r\n\r\nAny concerns over currency weakness can be dealt with by intervening in the foreign-exchange market and providing guidance as to where it wants the rupee to be rather than hiking rates, said Takesh Luckho, an independent economist.\r\n\r\nBy month-end, the tourism-dependent Seychelles is set to hold rates at a record low of 2% even as it battles its longest phase of deflation in seven years.\r\n\r\nWhile the deflationary trend creates pressure to cut rates for the first time in more than two years, the decision isn\u2019t clear cut as it carries risks to financial stability, said Ingrid Sinon, a Victoria-based economist and chief executive officer of Cutting-Edge Consulting.\r\n\r\nSouth Africa, Sept. 21\r\n \r\n \t Repurchase rate: 8.25% \r\n \t Inflation rate: 4.7% (July) \r\n \t Inflation target: 3%-6% \r\n \r\nEconomists are almost certain that rate setters at the South African Reserve Bank will stand pat for a second successive meeting while delivering a hawkish message after increasing borrowing costs by a cumulative 475 basis points since November 2021. Of the 15 participants surveyed by Bloomberg, 13 expect a hold, one a hike and another a cut.\r\n\r\n\u201cWe think that the SARB will exercise patience and adopt a wait-and-see approach to determine what the real economic impact has been of previous monetary policy tightening,\u201d said Sanisha Packirisamy, an economist at Momentum Investments. \u201cWe are beginning to see signs of consumer stress as households battle an increase in the cost of living.\u201d\r\n\r\nA drop in inflation expectations and a decline in the rate of price growth to within the central bank\u2019s target range provide it with room to pause, Packirisamy said.\r\n\r\nEswatini and Lesotho, whose inflation is also slowing and have their currencies pegged to South Africa\u2019s rand, may match the Reserve Bank\u2019s move by month-end.\r\n\r\nEgypt, Sept. 21\r\n \r\n \t Deposit rate: 19.25% \r\n \t Inflation rate: 37.4% (August) \r\n \t Inflation target: 7% +\/- 2 ppt \r\n \r\nAfter surprising with a 100 basis point interest rate hike in August, Egypt is expected to pause its monetary tightening this month.\r\n\r\n\u201cThe central bank will likely wait until the latest rate increase filters through,\u201d said Mohamed Abu Basha, head of macroeconomic research at Cairo-based EFG Hermes. While annual consumer prices kept accelerating in the past two months to new records, monthly trends are \u201cclearly hinting towards a slowdown in inflationary pressures,\u201d he said. Tobacco and volatile food items were the main drivers.\r\n\r\nThe North African nation increased its benchmark last month to 19.25%, the highest in data that stretches back to 2006, and above a previous peak reached during the currency crisis of 2016-2017.\r\n\r\nMozambique, Sept. 22\r\n \r\n \t MIMO interbank rate: 17.25% \r\n \t Inflation rate: 4.9% (Aug.) \r\n \r\nMozambique\u2019s central bank could cut its benchmark interest rate by 100 basis points to 16.25% when it meets, according to Ridle Markus, a macroeconomist at Absa Group Ltd.\r\n\r\nAnnual inflation in August slowed to an almost three-year low, giving room for looser monetary policy after price growth peaked at nearly 13% a year ago. Still, rising oil prices might prompt the Banco de Mocambique to take a cautious approach and postpone the cut to the November meeting, Markus said by email.\r\n\r\nZimbabwe\r\n\r\nOn the same day, its western neighbor Zimbabwe is predicted to keep rates steady at 150%. The MPC will meet for the first time since elections on Aug. 23-24 saw Emmerson Mnangagwa reelected as president.\r\n\r\nEarly signs are that the 81-year-old leader wants little change to economic policy. His retained Finance Minister Mthuli Ncube recently said that the current tight fiscal and monetary policy stance will continue.\r\n\r\nThe current \u201chawkish environment\u201d is acceptable to policymakers, said Lloyd Mlotshwa, the head of research at IH Securities, a Harare-based brokerage firm.\u201cA shift may come later in the year when blended inflation further declines.\u201d Annual inflation is currently around 77%.\r\n\r\nGhana, Sept. 25\r\n \r\n \t Policy rate: 30% \r\n \t Inflation rate: 40.1% (Aug.) \r\n \t Inflation target: 8% +\/- 2 ppts \r\n \r\nAn unexpected slowdown in August inflation and expectations that food-price base effects will drive disinflation in the fourth quarter will probably see the Bank of Ghana pause, Goldman Sachs Group Inc. economists Bojosi Morule and Andrew Matheny said in a research note. That\u2019s after cumulative increases of 16.5 percentage points since November 2021.\r\n\r\nThe central bank will likely view the decline in the inflation rate \u201cas a welcome development, and this increases our confidence that the hiking cycle is now complete,\u201d the economists said.\r\n\r\nNigeria, Sept. 26\r\n \r\n \t Policy rate: 18.75% \r\n \t Inflation rate: 24.1% (July) \r\n \t Inflation target: 6%-9% \r\n \r\nStubborn inflation in Nigeria, Africa\u2019s biggest economy, could see policymakers opt for for a 9th consecutive hike in borrowing costs.\r\n\r\n\u201cI expect rates to be higher for longer. There\u2019ll be no lowering of rates unless inflation begins to come down,\u201d Joachim MacEbong, senior governance analyst at Stears Insight said. \u201cThe government still needs foreign investment and higher rates will offset inflation and attract some inflow,\u201d he said.\r\n\r\nInflation is being stoked by the removal of costly fuel subsidies and currency pressure from reform of the exchange rate. As part of efforts to contain inflation the government said last month it would suspend raising gasoline prices and declared a state of emergency in July to allow the authorities to take exceptional steps to improve food security and supply.\r\n\r\nMorocco, Sept. 26\r\n \r\n \t Benchmark rate: 3% \r\n \t Inflation rate: 4.9% (July) \r\n \r\nBank al-Maghrib is set to keep its benchmark interest rate unchanged when its policy council meets, as urgency to rebuild areas hit this month by a deadly earthquake supplants concerns over inflation that forced a rare tightening streak earlier in the year.\r\n\r\n\u201cThis is not the time to raise the rates because it will stunt the market and risks being interpreted as bowing blindly to the IMF,\u201d said Abdelouahed El Jai, professor at the National Institute of Statistics and Applied Economics in Rabat. \u201cA rate hike will be an untimely constraint for the economy. We must boost the economy now especially when inflation has been on a retreat,\u201d he said.\r\n\r\nThe International Monetary Fund urged the nation before the earthquake to adopt more monetary tightening if it was to meet a lower inflation target for 2024.\r\n\r\nKenya, Oct. 3\r\n \r\n \t Central bank rate: 10.5% \r\n \t Inflation rate: 6.7% (Aug.) \r\n \t Inflation target: 5% +\/- 2.5 ppts \r\n \r\nKenya\u2019s MPC is likely to increase the benchmark rate by 50 basis points to cushion its depreciating currency and firmly anchor inflation despite it being within the target band.\r\n\r\n\u201cOngoing oil price strength, combined with a more rapidly depreciating shilling, may keep the authorities cautious,\u201d according to Razia Khan, chief economist, Africa and Middle East at Standard Chartered Bank. The nation\u2019s efforts to revive its interbank forex market \u201care best served by a tight monetary policy stance,\u201d she said."

"BoG, other African Central Banks set to hold rates as currency risks weigh"

Sustainability of Ghana’s Economic Recovery Reliant on High Gold Prices, Fitch Solutions SaysAMP

Mali Mine Seizure Deals $1 Billion Blow to World’s Second-Largest Gold ProducerAMP

NCA Shuts Down Nine Radio Stations for Regulatory Breaches, Including Three Owned by Chairman WontumiAMP