Interest rates: South Africa vs the rest of Africa

JOHANNESBURG – Central banks in key sub-Saharan African economies are expected to diverge on policy when they make interest-rate calls in the next week as some seek to tame inflation and others to boost growth.

Factors outside the usual ambit of monetary policy committees will also influence their calls. Since these panels last met, a deteriorating fiscal outlook in South Africa placed it one step closer to a full house of junk credit ratings, Ghana raised its budget-deficit forecast and Kenya scrapped a controversial law that capped interest rates.

“Where external liquidity is weak, or foreign-currency stability threatened, we expect central banks to either tighten or at least remain on hold,” said Razia Khan, the chief economist for Africa and the Middle East at Standard Chartered Bank Plc.

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