As the Monetary Policy Committee (MPC) members in eight African countries meet later this month, five central banks are projected to retain benchmark interest rates at their current levels, while three others are expected to raise theirs.

A survey conducted by Bloomberg predicted that the MPC of Ghana is likely to hike its policy rate from the 17% as it begins its regular Meetings on Wednesday, May 18, 2022.

A Sub-Saharan Africa Economist at the Bank of America, Tatonga Rusike, explained that Ghana is one of the countries whose MPC will be meeting this month that is more connected with the global market and that will likely impact the decision of the Committee to hike the policy rate. Tatonga Rusike also noted that policy makers will need to consider portfolio outflows and exchange rate weaknesses when they decide on interest rates during their upcoming meetings.

Ghana’s monetary authority will face a tough choice: support economic growth or tame runaway inflation. The decision even has economists split as inflation rose to 23.6% in April, 2022.

Absa Group Ltd analysts, Ridle Markus and Samantha Singh, expect the central bank to raise the benchmark interest rate by 200 basis points as they forecast inflation to exceed the MPC’s estimates after accelerating at a faster than anticipated pace in March and April.

However, Dr. Patrick Asuming, a senior lecturer at the University of Ghana Business School, projects the MPC to leave the rate untouched to support growth after a 2.5 percentage point increase in March, the biggest hike since at least 2002. “Policy rate hikes are not the real solution because inflation is driven largely by supply-side factors, hence, the central bank’s hiking of rates is just a battle in futility,” Patrick Asuming said.

Meanwhile, Bloomberg also expects Egypt and South Africa to hike their policy rates later this month as the economic challenges continue to mount.

The war in Ukraine has combined with pandemic lockdowns in China and other global factors to wrought economic mayhem on Africa. Inflation rate, food and energy prices have all surged over the past few months, thus dampening the prospects of the continent’s post pandemic recovery.

African central banks that could retain their interest rates

Speaking to Bloomberg, Tatonga Rusike said the likes of Zambia and Kenya would leave their benchmark interest rates unchanged because inflation rates in these countries are showing signs of slowing down.

According to Bloomberg, the five countries that are projected to retain their interest rates are: Nigeria, Kenya, Angola, Zambia and Mozambique.

Nigeria: The Central Bank of Nigeria’s monetary policy committee members are expected to retain interest at 11.5% when they meet on May 24. This would make it the 10th consecutive meeting when the members have voted to leave the rate unchanged. This is despite the fact that inflation rate has ticked over the past quarter to 15.9%.

Kenya: The Central Bank of Kenya’s MPC members will meet on May 30th, and they are expected to retain interest rate at 7% when they do. This would be the 14th consecutive meeting the MPC members would be voting to retain rate. And they are expected to do this in order to support as the East African country goes into its election season.

Mozambique: When MPC members of the Bank of Mozambique meet May 25, they are expected to retain rate at 15.25%. There are two reasons for this: first is to assess the impact of a 2% rate hike back in March, as well as the impact of a recent $456 million bailout by the International Monetary Fund.

Angola: MPC members of the Banco Nacional de Angola will meet on May 31st and they are expected to retain rate at 20%. This comes as inflation rate in the country has been slowing in recent months, with central bank governor, Jose de Lima Massano, assuring of further decrease in inflation rate.

Zambia: MPC members of the Bank of Zambia will meet on May 18 and they are expected to retain interest rate at 9%. This comes as policy makers are focused on slowing inflation rate.