Over the past month central banks in South Africa, Ghana, Zambia, and Mozambique have all hiked interest rates. These countries’ domestic situations all vary, but each is facing a combination of high inflation and a weakening currency. The Ghanaian cedi and Zambian kwacha have performed particularly poorly, with the latter shedding 4% against the US dollar over the past month. With the exception of Mozambique, this wave of tightening has come at a time of sluggish economic growth. Fresh falls in commodity prices, elevated inflation, and impending hikes from the US Fed – which we expect will tighten policy in December probably all played a part in pushing the African central banks to act.
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