Tony Chukwunyem 
The central banks of Nigeria, South Africa, Kenya, Ghana, Mauritius and Mozambique are likely to leave borrowing costs unchanged over coming weeks as a resurgence of coronavirus infections driven by the highly transmissible delta variant threatens to hinder already sluggish economic recoveries, a report by Bloomberg has said. It quoted Africa economist, Boingotlo Gasealahwe, as saying “we expect Africa’s major central banks — South Africa, Nigeria, Kenya and Ghana — to stay on hold in the coming weeks on growth concerns as the continent continues to grapple with third wave of infections amid a slow vaccine rollout.”
The Monetary Policy Committee (MPC) of CBN is scheduled to meet on Monday and Tuesday for its fourth meeting of 2021. At their last meeting in May, members voted to leave rates unchanged, citing the need to continue with pro- growth policies, given the economy’s sluggish recovery.
The report said that while higher oil prices may bolster economic growth in Nigeria, the continent’s top crude producer, the increased cost of imported refined fuel would also stoke consumer-price growth, adding to pressures of rising food costs. Chief economist for sub- Saharan Africa at JPMorgan Chase Bank NA, Ayomide Mejabi, said that although policy makers are expected to look through rising prices and only raise interest rates after the virus eases, they would be cautious of falling too far behind frontier markets such as Ukraine that have already started tightening.
He noted that relatively lower rates may make country’s fi-nancial assets less attractive to offshore investors. Still, multilateral support from the Group of 20 nations that have extended debt-relief measures for some of the world’s poorest countries to year-end, and the allocation of new reserves by the International Monetary Fund should ease fiscal pressures and provide countries with some breathing space to keep rates on hold, Mejabi said.
According to the report, while price data in Nigeria suggests inflation that is almost double the ceiling of the CBN’s official target may have already peaked, policy makers have made it clear that they’ll only switch to taming consumer prices after seeing solid growth momentum. “Upside risks to inflation in the near term are limited, and this makes standing pat on policy parameters an easy decision to make at the July meeting,” said Mosope Arubayi, an economist at IC Asset Managers. “Their stance could change, however, in the last or penultimate meeting of the year if trends in the global economy continue to foster economic wins for Nigeria,” he added.
