MPC decision: Weighing impact of less hawkish stance

African central banks have been making headlines with their recent policy stances, prompting the need for close monitoring of inflation trends and strategic countermeasures to stabilize economies. Analysts are closely watching the impacts of less hawkish positions taken by central banks in countries such as Angola and Ghana. These policy leanings can have significant repercussions on the foreign exchange and oil markets in the region. Wonuola Akanbi, Head of Energy at Infrastructure Sales, Global Sales at Stanbic IBTC Bank, shared insightful perspectives on these pressing issues in a recent interview on CNBC Africa. Ghana's recent decision to hold its policy rate has caught the attention of many analysts. The central bank's move comes amid a moderate decrease in inflation from 43.1% to 40.1% in August. Ghana's government aims to anchor inflation into single-digit figures over the next few years, with a target of around 30%. The exchange rate in Ghana has remained relatively stable, supported by factors such as IMF flows and contributions from the mining and oil sectors. Despite this stability, interest rates in the market remain high, with overnight rates hovering around 27%. The expectation is that the Bank of Ghana will maintain its current rate position till the end of the year. Akanbi expressed optimism about the potential for the inflation slowdown to continue, attributing the trend to a high base effect. Turning to Nigeria, the focus shifted to the country's central bank and the recent leadership transition. The appointment of a new Central Bank Governor has raised expectations for clear policy directions. Market participants await decisive actions to address issues such as clearing the FX backlog and implementing evidence-based monetary policies. While addressing these challenges may seem daunting, Akanbi believes that bilateral deals and local bank partnerships could provide solutions to manage FX obligations effectively. The market's uncertainty underscores the need for swift and strategic decisions from the new CBN Governor. In the oil market, Nigeria faces the challenge of meeting its OPEC production quota amidst factors like oil theft and inadequate investment in onshore assets. The recent rally in oil prices, with Brent hovering around $90 per barrel, presents an opportunity for Nigeria to capitalize on higher revenues. However, boosting local production remains crucial to fully exploit this potential. Despite OPEC's production cuts contributing to price stability, Nigeria must prioritize increasing its output to benefit from the market conditions. The discussion also touched on the fixed income market, highlighting the surplus liquidity in the Naira market and its impact on treasury instruments. Bond auctions and T-Bill market sizes are evolving, with expectations of smaller T-Bill sizes in the future. Liquidity influx and cash availability drive market dynamics, with overnight rates signaling abundant liquidity. While short-term rates have compressed, long-term bond yields remain elevated as market players await the central bank's policy directives. Overall, a cautious approach prevails as stakeholders monitor how the central bank addresses liquidity concerns and steers market activities. Akanbi's insights shed light on the intricate interplay between central bank policies, market developments, and economic stability across African countries.