Monetary Policy
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From South Africa to Ghana, Africa’s top ten economies introduced debt securities to finance the economy, balance fiscal deficit, and settle maturing debts amid leading macro economy indicators.
Zambia’s external debt rose to $16bn in Q3 2025, driven by growing reliance on multilateral loans as market access stayed limited after its 2020 default.
The decision marks the bank’s first monetary move of the year, and the second consecutive rate hold, following a cut in July 2025.
Egypt and Afreximbank are studying a pan-African Gold Bank to anchor gold refining, vaulting and trading on the continent and reduce reliance on offshore hubs.
After two years of tightening, African central banks split in 2025—some cutting aggressively as inflation eased, others holding firm to protect currency stability and anchor hard-won disinflation gains.
Egypt’s inflation cooled more than expected in November, easing pressure on the central bank and strengthening the case for resuming rate cuts at its 25 December meeting.
Kenya cuts its benchmark rate to 9% in a ninth straight easing move, bringing borrowing costs to their lowest since early 2023 as credit conditions and FX reserves strengthen.
The BoG’s latest decision aligns strongly with market expectations and reflects the bank’s confidence that price growth will remain contained in the near term.
Nigeria’s pause echoes the Bank of Uganda’s decision earlier this month to keep its key lending rate unchanged at 9.75% for the fifth consecutive policy meeting, despite inflation falling to a seven-month low in October.
Africa’s most industrialised economy is among several across the continent easing monetary policy this year. Zambia cut its key lending rate for the first time in more than five years, while Nigeria, Ghana, Egypt, and Kenya have also lowered rates.
The Bank of Zambia has reduced its key lending rate for the first time in over five years, citing slowing inflation in Africa’s second-largest copper and cobalt producer.
The decision comes three days after S&P Global Ratings upgraded the country’s sovereign rating outlook to “positive” from “stable,” citing stronger growth prospects and rising per capita income.
The central banks also moved to ease monetary transmission and spur credit growth by lowering the Minimum Reserve Requirement on rupee-denominated deposits from 13% to 10%, effective October 8.
Inflation, currency volatility, and debt stress continue to shape Africa’s monetary path in 2025, prompting tighter policies in fragile economies and gradual easing where stability has improved.
Consumer prices have eased sharply from last year’s highs, however, erratic movements and a slight uptick in September 2025 point to persistent price pressures.
The shift in market sentiment comes as yields on government securities continue to fall, narrowing the risk premium between fixed income and equities.
The Central Bank of Kenya insists that the move will offer further support to credit expansion and sustain the country’s growth trajectory while ensuring that prices remain stable.
Last week, the CBE cut its overnight deposit rate by 100 basis points to 21%, its fourth consecutive reduction this year and the lowest level in two years.
Muhammad Sanusi II, Emir of Kano and former central-bank governor, warns that Nigeria’s early monetary loosening risks reigniting inflation and undoing recent gains in economic stability.
The 100 basis point cut was loosely in step with market expectations and follows a steady decline in inflation since mid-year.