Central banks in Nigeria, Kenya to hold rates next week

Kenya and Nigeria will both leave monetary policy unchanged next week, a Reuters poll forecast, as inflation in the former is not yet tame enough while an interest rate cap in the latter limits policymakers’ room for manoeuvre.

All 15 analysts polled this week said rates would be held at 14.0 percent in Nigeria and 10.0 percent in Kenya.

Nigerian inflation is slowing but remained high at almost 16 percent year-on-year in October while by contrast, Kenya is ripe for easing with annual inflation falling to 5.72 percent last month.

However, the Kenyan central bank is hamstrung by the cap imposed last year that limits commercial lending rates to 4 percentage points above its official rate. “The interest rate cap in Kenya and the multiple exchange rate regime in Nigeria creates problems for monetary policymakers,” said William Jackson at Capital Economics.

Rates are expected to be cut by 100 basis points in either July or September 2018 in Nigeria to 13 percent but will remain stable in Kenya throughout next year.