Central banks in Africa’s largest economies are preparing to follow the trend seen in other emerging markets and, over the coming weeks, reduce interest rates where inflationary pressures are easing. In countries where the economic outlook remains uncertain, central banks are expected to maintain a cautious stance.
For many of these banks, this will be the first rate-setting meeting since the United States (US) imposed a universal 10% tariff on all imports. This measure, which makes foreign products more expensive, has had a global impact and created uncertainty in international markets, including in Africa.
In addition to this blanket tariff, Washington also applied a 145% tax specifically on products from China. China is Africa’s largest trading partner, and any shift in its relationship with the US can directly affect African economies. More recently, the US decided to reduce that tariff on Chinese goods to 30%, but only for a provisional period of 90 days. This decision offers some relief to markets but does not eliminate the prevailing uncertainty in global trade.
Against this backdrop, African central banks need to balance their responses to domestic inflation with the effects of instability triggered by US trade policies. The priority will be to act prudently, adjusting policies according to the specific economic realities of each country.
Thus, central banks are expected to lower interest rates where inflation is declining or remain watchful in situations where the economic direction is still unclear.
Source: Bloomberg
