African central banks delivered nearly 1,000 basis points of interest-rate cuts in September, with Nigeria leading the way with an aggressive 350-basis-point reduction. This move was driven by easing inflation and improving domestic conditions, which gave policymakers room to lower borrowing costs. The cuts highlight the growing divergence in monetary policy across the continent, with some countries moving in the opposite direction.
Nigeria's Central Bank reduced its Monetary Policy Rate by 350 basis points to 23 percent from 26.5 percent, its biggest single reduction in at least two decades. The decision came as inflation moderated and foreign-exchange conditions improved. Nigeria's headline inflation eased to 15.39 percent in August from 15.43 percent in July, while the country's gross external reserves stood at $55.25 billion in September.
Zambia also made a significant move, cutting its policy rate by 250 basis points to 10.75 percent, the lowest since October 2023. The decision was driven by easing inflation, which dropped to 6.1 percent in September from 6.2 percent in August. This brought price growth closer to the lower end of the Bank of Zambia's six–eight percent target range.
Zimbabwe continued its monetary-policy normalisation with a 250-basis-point cut to 27.5 percent, extending a rapid process of easing. The Reserve Bank of Zimbabwe had already cut the rate by 500 basis points in June, bringing cumulative reductions since then to 750 basis points. Annual ZiG inflation rose modestly to 3.7 percent in September from 2.9 percent in August.
Angola extended its easing cycle with a 100-basis-point cut to 14.75 percent, its third consecutive reduction. The move was supported by falling inflation, giving the central bank greater room to gradually loosen monetary conditions while monitoring price stability. This places Angola among the African economies with the clearest easing cycles.
In contrast, South Africa raised its policy rate by 25 basis points to 7.25 percent, citing renewed upside risks to inflation, including higher fuel prices and broader global supply pressures. The decision was unanimous and reflects the vulnerability of oil-importing economies to global energy shocks.
While four African central banks cut rates in September, Ghana, Egypt, Morocco, and Mozambique kept their benchmark rates unchanged, reflecting more cautious assessments of inflation and external risks. These countries are taking a wait-and-see approach, assessing the impact of global economic trends and domestic conditions on their economies.
Key points
- Nigeria's 350-basis-point rate cut led the African easing wave in September.
- Zambia and Zimbabwe also made significant rate cuts, driven by easing inflation.
- South Africa bucked the trend, raising its policy rate amid renewed inflation risks.
