JOHANNESBURG – Central bankers in five key sub-Saharan African countries will meet on interest rates in the next ten days as the focus turns to them for measures to shore up their economies that are expected to be hit by the novel coronavirus.
Since their monetary policy committees last met, South Africa declared a national state of disaster, Ghana set aside the local-currency equivalent of $100 million to combat virus-driven contagion and Kenya’s central bank dropped charges on mobile-money transactions to curb the use of cash for hygiene reasons. Many governments have moved to restrict travel.
On Monday, monetary policymakers in Mozambique reduced reserve requirements to boost liquidity, and those in Nigeria announced measures including the extension of a moratorium on principal debt repayments. Still, after the U.S. Federal Reserve cut its main interest rate to near zero, the attention now is on what African central banks, many of whom target inflation and have to prop up volatile currencies, will do with interest rates to help their economies.
“We expect the Covid-19 outbreak and current market turmoil to be major points of discussion as policy makers deliberate on the rate decision, with the bias certainly downwards for those countries which have scope to cut,” said Ridle Markus, an economist for sub-Saharan Africa at Absa Bank Ltd. Policy makers in oil-producing countries “will need to balance the significant downside risks to growth, brought by the slump in oil prices, against the risks resulting from the deteriorating balance of payments and worsening inflation outlook,” he said.
Here’s what central bankers in the region may do in the next ten days:
