Standard Bank: Ghana’s MPC likely to hold MPR at 29% in march meeting
Standard Bank expects Ghana’s Monetary Policy Committee at its March meeting to hold the policy rate at 29 percent to effectively steer inflation downward, deferring the next rate action to May. Meanwhile, the bank notes lingering pressures reflected in Nigeria's February Purchasing Manager’s Index may push domestic demand low, limiting growth potentials in the first quarter of this year. Rhode Luemba, Head of Flow Sales, Global Markets at Standard Bank Group joins CNBC Africa for more on these.
Tue, 19 Mar 2024 14:24:34 GMT
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AI Generated Summary
- Ghana's MPC likely to maintain policy rate at 29% in March meeting to address inflation concerns, with a potential rate adjustment in May
- Discussions with international bondholders crucial for Ghana's debt relief and foreign investment attraction
- Nigeria's PMI for February shows a slowdown in growth due to currency depreciation, fuel subsidy removal, and rising food prices, impacting domestic demand and growth prospects
Standard Bank expects that Ghana's monetary policy committee will maintain the policy rate at 29% during its March meeting to address inflation concerns, delaying any rate adjustments until May. Rhode Luemba, Head of Flow Sales at Standard Bank Group, predicts that Ghana's inflation could range from 13 to 17% by the end of 2024. While achieving the inflation target is challenging, Luemba believes that with continued monetary policy tightening, the MPC may be able to stabilize inflation. Additionally, Ghana's discussions with international bondholders regarding debt relief are seen as a critical step towards attracting foreign investment. The non-disclosure agreements signed by bondholders and the Ghanaian government aim to facilitate confidential negotiations and expedite the closure of deals. Turning to Nigeria's economy, the recent Purchasing Managers' Index (PMI) for February highlighted a slowdown in growth, with the PMI dropping to 51 points from 54.5 in January. Factors contributing to the weaker PMI included a decline in employment levels for the first time in 10 months, as well as reduced output and new orders. These trends were influenced by local currency depreciation, rising input prices following the removal of fuel subsidies, and increased food prices. As a result, domestic demand is expected to remain subdued in the first quarter of 2024, potentially constraining economic growth. For Nigeria's GDP growth, Luemba anticipates a modest expansion, citing limited purchasing power due to currency depreciation and high inflation. The government's intervention and increased liquidity inflows will be crucial in supporting economic recovery. Shifting focus to Angola, the monetary authorities recently raised the key rate to 19% and adjusted various tools to manage excess liquidity. The primary rate was increased from 18% to 20%, while the compulsory reserve coefficient rose to 20%. These policy adjustments aim to curb inflationary pressures and regulate market liquidity, given Angola's February inflation rate of 2.58%, with an expected annual inflation rate close to 24%. Overall, Standard Bank's analysis underscores the importance of prudent monetary policy decisions in addressing economic challenges and stimulating growth across African markets.
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