It appears both Kenya and Nigeria plan to follow Ghana’s lead and cut rates in the third quarter. The action is expected to take place provided there is enough support for the idea in Nigeria and if financial officials in Kenya can adopt easier commercial lending policies ion that country.
Kenya remains hamstrung by a bill limiting commercial lending rates to 4 percentage points above its official rate. Nigeria’s Monetary Policy Committee won’t be able to make a decision for or against the rate cut until it has enough members seated to debate the issue. Eight members of the 12-member committee still need to be appointed.
Nigeria’s central bank was forced to cancel its January meeting as it was unable to reach a quorum. But the Senate plans to start screening new members for the interest rate committee after it held up some of President Muhammadu Buhari’s nominees in a political spat.
According to Reuters poll of 11 analysts for some of Africa’s major central bank, the Nigeria and Kenya’s benchmark rates will remain at 14.0 and 10.0 percent respectively for now.
Inflation in both Nigeria and Kenya slowed recently, making both ripe for easier policy, and according to the poll there will be 200 and 100 basis points worth of cuts coming this year, respectively.
“There is a case for policy loosening in Nigeria and Kenya, but inflation in Nigeria has been stickier at least until February and the delay in appointing new members of the MPC has also held up policy making,” said John Ashbourne, Africa economist at Capital Economics.
After 600 basis points worth of cuts in the past two years, Ghana is expected to press on and cut 100 basis points to 19.0 percent later this month and then continue chopping until it reaches 17.0 percent by end-year.
South Africa, Africa’s most industrialized economy, is also closer to cutting rates this year. However, officials there are waiting on a decision by Moody’s ratings agency regarding the country’s credit worthiness. That decision is expected by the end of March.
Source : cgtn
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