Africa's biggest central banks moved in opposite directions this week, with Nigeria delivering a historic rate cut while South Africa tightened policy for the second time this year.
The Central Bank of Nigeria cut its benchmark monetary policy rate by 350 basis points to 23 per cent at its September meeting — its largest reduction since 2007 — after holding the rate at 26.5 per cent at both its May and July meetings. The decision was taken at the 307th meeting of the Monetary Policy Committee in Abuja, attended by 11 members. The standing facilities corridor was recalibrated to +50/−300 basis points around the rate, while the cash reserve requirement was left unchanged at 45 per cent for deposit money banks, 16 per cent for merchant banks and 75 per cent for non-TSA public sector deposits.
Governor Olayemi Cardoso framed the cut as an operational reset rather than a shift in policy stance. "The committee decided to reset the MPR and recalibrate the policy corridor as an important operational realignment aimed at strengthening monetary policy transmission and reinforcing the primacy of the monetary policy rate," he said. Market interest rates had increasingly diverged from the benchmark, blunting the effect of earlier tightening.
Nigeria's annual inflation eased marginally to 15.39 per cent in August from 15.43 per cent in July. Cardoso said inflation was expected to moderate further, supported by past tightening, exchange-rate stability and improved inflation expectations. Economists described the move as balanced and well-timed, while cautioning that cheaper credit for businesses depends on the cut actually being transmitted to lending rates.
South Africa took the opposite path, with Pretoria's message distinctly warier than Abuja's. The South African Reserve Bank raised its policy rate by 25 basis points to 7.25 per cent in a unanimous vote — its second increase of the year — as conflict in Iran added fuel to energy costs and other price pressures built. SARB Governor Lesetja Kganyago said: "South Africa's growth recovery has slowed, while inflation has increased well above our target," adding that "global shocks are clearly hurting our economy." The bank lifted its near-term inflation forecasts and cut its 2026 growth forecast to 1.2 per cent from 1.4 per cent. It expects headline inflation to climb above 5 per cent later this year before settling back toward its 3 per cent target around the end of 2027, with the rand resilient and food-price pressures contained.
Egypt and Ghana opted to stand pat. The Central Bank of Egypt kept its deposit rate at 19 per cent and lending rate at 20 per cent for a sixth consecutive meeting, as annual urban inflation eased to 14.5 per cent in August from 14.9 per cent in July, even though core inflation ticked up to 14.9 per cent from 14.7 per cent. It cited renewed regional tensions, tighter global financial conditions and supply-chain disruptions; economic growth slowed to 4.7 per cent in the second quarter from 5 per cent in the first. Ghana held its policy rate at 14 per cent for a third straight meeting, with headline inflation rising to 5 per cent in August from 4.6 per cent in July but staying below the lower end of its target band. Governor Johnson Asiama said "global tensions have constricted global supply chains," while exchange-rate stability helped contain imported inflation.
Morocco's Bank Al Maghrib also held steady at 2.25 per cent. Inflation averaged just 0.3 per cent over the first eight months of 2026, with the impact of higher energy prices cushioned by transport subsidies and stable gas and electricity prices. The bank expects inflation to average 0.7 per cent this year and 1.5 per cent in 2027, with growth slowing to 4.4 per cent in 2026 from 4.9 per cent in 2025 and 2.9 per cent in 2027.
The split decisions show how differently domestic pressures are playing across the continent: Nigeria easing to restore policy transmission as inflation moderates, South Africa tightening to keep temporary shocks from becoming entrenched, and Egypt, Ghana and Morocco holding steady amid geopolitical, energy and supply-chain risks.
Sources: "Africa's biggest central banks diverge as Nigeria cuts, South Africa hikes" (BusinessDay NG, https://businessday.ng/?p=1196674); "ZAWYA: The Central Bank of Nigeria eases interest rate to 23%" (Reuters via TradingView News India, https://in.tradingview.com/news/reu...al-bank-of-nigeria-eases-interest-rate-to-23/)
The Central Bank of Nigeria cut its benchmark monetary policy rate by 350 basis points to 23 per cent at its September meeting — its largest reduction since 2007 — after holding the rate at 26.5 per cent at both its May and July meetings. The decision was taken at the 307th meeting of the Monetary Policy Committee in Abuja, attended by 11 members. The standing facilities corridor was recalibrated to +50/−300 basis points around the rate, while the cash reserve requirement was left unchanged at 45 per cent for deposit money banks, 16 per cent for merchant banks and 75 per cent for non-TSA public sector deposits.
Governor Olayemi Cardoso framed the cut as an operational reset rather than a shift in policy stance. "The committee decided to reset the MPR and recalibrate the policy corridor as an important operational realignment aimed at strengthening monetary policy transmission and reinforcing the primacy of the monetary policy rate," he said. Market interest rates had increasingly diverged from the benchmark, blunting the effect of earlier tightening.
Nigeria's annual inflation eased marginally to 15.39 per cent in August from 15.43 per cent in July. Cardoso said inflation was expected to moderate further, supported by past tightening, exchange-rate stability and improved inflation expectations. Economists described the move as balanced and well-timed, while cautioning that cheaper credit for businesses depends on the cut actually being transmitted to lending rates.
South Africa took the opposite path, with Pretoria's message distinctly warier than Abuja's. The South African Reserve Bank raised its policy rate by 25 basis points to 7.25 per cent in a unanimous vote — its second increase of the year — as conflict in Iran added fuel to energy costs and other price pressures built. SARB Governor Lesetja Kganyago said: "South Africa's growth recovery has slowed, while inflation has increased well above our target," adding that "global shocks are clearly hurting our economy." The bank lifted its near-term inflation forecasts and cut its 2026 growth forecast to 1.2 per cent from 1.4 per cent. It expects headline inflation to climb above 5 per cent later this year before settling back toward its 3 per cent target around the end of 2027, with the rand resilient and food-price pressures contained.
Egypt and Ghana opted to stand pat. The Central Bank of Egypt kept its deposit rate at 19 per cent and lending rate at 20 per cent for a sixth consecutive meeting, as annual urban inflation eased to 14.5 per cent in August from 14.9 per cent in July, even though core inflation ticked up to 14.9 per cent from 14.7 per cent. It cited renewed regional tensions, tighter global financial conditions and supply-chain disruptions; economic growth slowed to 4.7 per cent in the second quarter from 5 per cent in the first. Ghana held its policy rate at 14 per cent for a third straight meeting, with headline inflation rising to 5 per cent in August from 4.6 per cent in July but staying below the lower end of its target band. Governor Johnson Asiama said "global tensions have constricted global supply chains," while exchange-rate stability helped contain imported inflation.
Morocco's Bank Al Maghrib also held steady at 2.25 per cent. Inflation averaged just 0.3 per cent over the first eight months of 2026, with the impact of higher energy prices cushioned by transport subsidies and stable gas and electricity prices. The bank expects inflation to average 0.7 per cent this year and 1.5 per cent in 2027, with growth slowing to 4.4 per cent in 2026 from 4.9 per cent in 2025 and 2.9 per cent in 2027.
The split decisions show how differently domestic pressures are playing across the continent: Nigeria easing to restore policy transmission as inflation moderates, South Africa tightening to keep temporary shocks from becoming entrenched, and Egypt, Ghana and Morocco holding steady amid geopolitical, energy and supply-chain risks.
Sources: "Africa's biggest central banks diverge as Nigeria cuts, South Africa hikes" (BusinessDay NG, https://businessday.ng/?p=1196674); "ZAWYA: The Central Bank of Nigeria eases interest rate to 23%" (Reuters via TradingView News India, https://in.tradingview.com/news/reu...al-bank-of-nigeria-eases-interest-rate-to-23/)
