Africa’s brief hold-rate era is drawing to a close as a growing number of central banks once again prioritise fighting inflation over supporting economic growth, signalling a new phase in the continent’s monetary policy cycle.
After almost four months in which most African central banks left borrowing costs unchanged as inflation eased from multi-year highs, policymakers are becoming increasingly cautious. Ethiopia’s decision last week to raise its Monetary Policy Rate (benchmark interest rate)for the first time in two years adds to earlier tightening moves by South Africa, Namibia, Rwanda, and Tanzania, reinforcing signs that the continent’s monetary authorities are once again leaning towards tighter policy amid renewed inflationary pressures.
The shift reflects growing concerns that recent gains in taming inflation could prove short-lived. Rising oil prices, weakening currencies and renewed geopolitical tensions are forcing central banks to reassess the balance between supporting economic growth and preserving price stability.
Renewed hostilities
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