Inflation worries, Fed prompt hikes across Africa

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.