CBN maintains interest rates, but hints at policy shift

The Central Bank of Nigeria kept its benchmark rate on hold at 11.50% today, but the statement signalled that monetary policy normalisation is now on the horizon. While we don’t expect interest rates to be raised imminently, we have pencilled in 200bp of hikes over 2022-23.
Virag Forizs Emerging Markets Economist
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Africa Economics Weekly

Balance on South African MPC tipping towards rate hike

A raft of recent economic developments have shaken up our near-term views on monetary policy in South Africa, and we now expect a 25bp rate hike at next week’s MPC meeting. However, our forecasts for the next 12-18 months are still more dovish than most investors'.

21 January 2022

Africa Data Response

South Africa Activity Data (Nov.)

November’s hard activity data suggest that South Africa’s economy performed strongly in the middle of Q4 and the early evidence is that the latest Omicron-driven virus wave inflicted only minimal economic damage last month. But even so, the recovery this year will remain stuck in the slow lane.

19 January 2022

Africa Data Response

South Africa Consumer Prices (Dec.)

South Africa’s inflation rate rose to a stronger-than-expected 5.9% y/y in December, probably tilting the Reserve Bank more in favour of continuing to tighten monetary policy. But with soft core price pressures and an Omicron-driven virus wave clouding the recovery, this month’s decision is likely to be a close call. Further out, we think that interest rates will rise more slowly than investors currently expect.

19 January 2022

More from Virag Forizs

Africa Economics Weekly

African central banks and the EM rate hike club

This week, the South African Reserve Bank joined its EM counterparts in tightening monetary policy, but we don’t think that policymakers in South Africa will raise interest rates as aggressively as central banks across Emerging Europe and Latin America. Elsewhere, a further fall in inflation last month and soft Q3 GDP figures mean that Nigeria’s central bank is unlikely to join the EM rate hike club any time soon.

19 November 2021

Africa Economics Update

SARB: lift-off for rates, but tightening cycle to be slow

The South African Reserve Bank fired the starting gun on monetary policy normalisation with a 25bp hike in the repo rate, to 3.75%, today amidst growing concerns about inflation risks. But the statement lends support to our view that interest rates will be raised more slowly than investors expect over 2022-23.

18 November 2021

Africa Data Response

Nigeria GDP (Q3)

The drop in Nigeria’s GDP growth to 4.0% y/y in Q3 points to the recovery in activity outside the key oil sector petering out. We think this will continue over the coming quarters, weighing on headline growth even as oil output gradually picks up.

18 November 2021
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