Key African economies \u2014 including Egypt, Nigeria and Kenya \u2014 are poised to cut interest rates at their first policy meetings of the year as price pressures continue to slow, though central bankers are expected to tread carefully as easing cycles near their end.<\/p>\n
Those economies will be joined by at least 11 others over the course of the month in setting interest rates, including South Africa and Mozambique, where policymakers\u2019 next moves are far less certain.<\/p>\n
Read: Goldman, Morgan Stanley\u2019s SA inflation call undercuts Sarb<\/p>\n
\u201cWith global growth expected to ease to around 3.1% this year and monetary stances diverging across advanced markets, African policymakers will need to balance the opportunity for easing with ongoing external vulnerabilities,\u201d according to Angelika Goliger, EY Africa chief economist.<\/p>\n
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Here\u2019s what African nations may do and why:<\/p>\n
A monthlong wave of monetary policy decisions will begin Wednesday, with Ghana and Mozambique.<\/p>\n
Ghana, Africa\u2019s largest gold producer, is projected to extend its easing cycle as inflation has cooled sharply and its real policy rate remains elevated at 12.6 percentage points.<\/p>\n
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Read: Prime interest rate: What is it, and do we need it?<\/p>\n
\u201cBased on conditions we are seeing, with the inflation rate below the lower band of the target and a fairly stable currency,\u201d Ghana is expected to cut by a cautious 200 basis points to support faster economic growth, said Patrick Asuming, a senior lecturer at the University of Ghana Business School.<\/p>\n
Inflation in the West African nation eased to 5.4% in December, falling below the 6% lower bound of the central bank\u2019s target range for the first time since 2019.<\/p>\n
Less clear is what Mozambique will do, where inflation is also softening and the real rate is at 6.3 percentage points. The country \u201cfaces persistent FX?reserve pressures, limiting near?term scope to ease until the metical stabilises,\u201d Goliger said.<\/p>\n
Attention will turn to South Africa on Thursday, with economists deeply divided over the central bank\u2019s next move.<\/p>\n
While the central bank is expected to revise its 2026 inflation forecast down to 3.3% from 3.5% \u2014 close to its new 3% target \u2014 analysts are split on the policy outcome. Thirteen surveyed by Bloomberg forecast rates will be kept at 6.75%, while 11 expect a 25-basis-point cut.<\/p>\n
The divide centers on whether policymakers will wait for clearer signals from the rand and oil prices, or move now, encouraged by the currency\u2019s recent rally.<\/p>\n
Africa\u2019s largest economy\u2019s decision will weigh on neighbors Eswatini, Namibia and Lesotho, whose currencies are pegged to the rand and are set to announce their own rate decisions in the days ahead.<\/p>\n
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Policymakers in Egypt, Kenya and Nigeria, who will give their decisions next month, are predicted to lower borrowing costs.<\/p>\n
\u201cWe see scope for a 100-basis-point\u201d cut in Egypt, 25 basis points in Kenya and 200 basis points in Nigeria, said Gergely Urmossy, an emerging-markets strategist at Societe Generale.<\/p>\n
Read: Fed to hold rates as political storm intensifies around Powell<\/p>\n
\u201cDomestic inflationary developments and inflation outlook allow for rate cuts, but the timing and the size of the cuts are subject to uncertainty, predominantly due to \u2014 potential \u2014 shifts in global investor sentiment,\u201d Urmossy said. \u201cThroughout 2026, we expect several hundred basis points of rate cuts in Egypt, Ghana and Nigeria, while in Kenya our terminal policy rate forecast is 8.5% \u2014 with downside risks.\u201d Its benchmark rate is currently at 9%.<\/p>\n
Others due to make decisions over the month \u2014 including Mauritius and Uganda \u2014 are likely to remain cautious and leave rates unchanged to further assess the inflation trajectory.<\/p>\n
Read: Zimbabwe inflation hits single digits for first time since 1997<\/p>\n
\u201cOverall, the region is nearing the end of its easing cycle,\u201d said Goliger. \u201cWhile select markets \u2014 notably Angola, and to a lesser extent Kenya and Ghana \u2014 may still deliver incremental cuts, the broad phase of monetary loosening is likely to taper by the second half of 2026,\u201d she said. \u201cUncertain global financial conditions and ongoing FX constraints remain the key limiting factors.\u201d<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
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