Monetary Policy decisions across Africa

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Monetary Policy Committees (MPC) of 7 African countries under our watchlist (Nigeria, South Africa, Zambia, Egypt, Ghana, Kenya and Angola) were scheduled to meet over May-19 to decide on the best monetary policy recommendations for their various economies.

This week, four of those MPC met with only Zambia taking a different turn. More specifically, MPC in Nigeria, South Africa and Egypt left rates unchanged at 13.5%, 6.75% and 16.75% respectively while the Zambian MPC took a different turn as it raised its policy rate by 50bps to 10.25% in a quest to quell inflationary pressures.

On the global scene, the dovish chorus of Advanced central banks has been reinforced by the release of the Fed’s minutes. The minutes of the meeting that was held earlier this month relayed the Federal Open Market Committee’s intention to adopt a patient approach to determining future adjustments to rates, at least in the near term. This relatively accommodative stance is positive for flows to emerging markets as carry trade becomes attractive.

With this backdrop, we do not expect a broad dramatic change in monetary policy stance by Apex banks in Africa. Yet, this does not single out inflationary
pressures emanating from drought, upticks in food prices and increment fuel prices, that could possibly sway the various MPC’s decisions.

United Capital Research