Monetary Policy Decisions: Four SSA countries at the center-stage

Sub-Saharan Africa Sovereigns See Record Downgrades in 2020, Pressures Remain

Monetary policy decisions took the centre-stage this week, as four SSA countries (Ghana, Kenya, Nigeria and Mauritius) held their last Monetary Policy Committee (MPC) meeting for the year. Notably, after considering events in the global and domestic space, only the Kenyan MPC delivered a rate cut – it’s first since Jul-18.

Specifically, the Ghanaian MPC left its key policy rate unchanged at 16.0% (the fifth consecutive hold since Jan-19 surprise cut) amid strong economic growth, plummeting inflation and positive external position. Also, the Mauritian and Nigerian MPC left their benchmark rates unchanged at 3.35% and 13.50% respectively, despite slowing economic growth. In Kenya, the MPC cut interest rate from 9.0% to 8.5%, noting the need to drive growth to optimal levels amid expectations for inflation to remain well-anchored within the target range. Also, the committee remarked that ongoing tightening of fiscal policy necessitated the need for a more accommodative monetary policy to support economic activity.

In terms of forward-looking guidance, the MPC in Ghana, Nigeria and Mauritius struck a neutral tone, adopting a wait and see approach. However, the Kenyan central bank Governor signalled scope for a more accommodative monetary policy stance over the coming quarters.

United Capital Plc Research (UCR)