African interest rates begin rise

The South African Reserve Bank (SARB) finally began its long-awaited tightening cycle by raising the repo rate from 5.75% to 6.00% this month. We had anticipated the move, and expect that the SARB will hike rates by another 25bp later this year as inflation rises, the rand weakens, and US monetary policy is normalised. But the impacts of currency weakness and rising US rates will also prompt tighter monetary policy elsewhere in the continent; Uganda, Kenya, and Ghana have all hiked rates over the past quarter and we expect that Nigeria will do so within the coming months. Higher rates may weigh on growth in some countries – particularly debt-laden South Africa – but tighter policy seems inevitable in many markets.