News & Analysis: Monetary policy

Kenya central bank has ‘plenty of firepower’, governor says

“Kenya’s central bank governor said on Thursday that policymakers still had plenty of firepower left to limit the damage to the country’s economy from the coronavirus crisis.”

via Reuters

COVID-19 sustains assault on battered regional currencies

“In recent weeks, regional currencies have come under increased pressure against the dollar as the impact of the COVID-19 pandemic threatens to dismantle efforts by central banks to maintain stability and arrest negative impact on their economies. Depreciating currencies result in increased cost of living as prices of basic goods rise; and servicing of hard currency-dominated loans becomes expensive for institutional borrowers.”

via The East African

African banks adopt robust measures against lockdown losses

“Central and commercial banks across Africa are working together to increase liquidity and improve access to finance in an effort to keep the economies within which they operate functioning during the COVID-19 lockdown.”

via African Business Magazine

South Africa’s banks mull how to avoid loan defaults when virus relief ends

“South African banks are looking at options ranging from debt consolidation to new ways of leveraging equity to avoid defaults when coronavirus-related debt relief measures end, industry officials said.”

via Reuters

South Sudan’s central bank cuts benchmark interest rate to 10%

“South Sudan’s central bank said it cut its benchmark interest rate to 10% from 13%, as part of efforts to mitigate the effects of the coronavirus outbreak on the economy. This is the second time the central bank has slashed its rate since April, when it cut by 200 basis points to 13%.”

via Reuters

The Initial Policy Response to COVID-19 from African Central Banks

In response to COVID-19, African central banks have deployed a variety of monetary policy tools, including lowering policy rates, reducing capital requirements, providing various liquidity support measures to the banking sector, allowing loan deferrals and refinancing frameworks for distressed firms, and introducing new support measures mobile money and digital finance.

via COVID-19 Africa Watch

Half of Ugandan banks fail pandemic liquidity test

“More than half of Uganda’s commercial banks would have collapsed if the Central Bank had enforced a three-month customer loans repayments holiday at the onset of the COVID-19 pandemic, the sector regulator has revealed. A stress test conducted on Uganda’s 25 banks showed most would not have survived the cash crunch since loan interest income accounts for 60 percent of their revenue.”

via The East African

Central Bank of Seychelles loosens monetary policy rate by 1%

“Following thorough evaluation of external and local economic situations, which have taken a downturn due to the impacts of COVID-19, the Central Bank of Seychelles is further loosening the monetary policy rate by 1% for the third quarter of 2020.”

via Seychelles Nation

Should the rising stock market amid the chaos raise suspicions?

“It remains doubtful that the SA Reserve Bank will start buying local corporate debt. The bank has indicated that it will be sticking to government bonds to help support liquidity in the primary market, and it already owns around R30-billion in state treasuries. There has been no indication by the monetary authority that it will expand its holdings any time soon.”

via Daily Maverick

Morocco Cuts Rates to Record Low to Cushion Economy From Virus

“Morocco made its second-straight interest rate cut of 2020, pumping more stimulus into the tourism-reliant economy as it gradually emerges from a three-month lockdown. The benchmark rate was reduced by 50 basis points to a record low 1.5%, the central bank said Tuesday in a statement. It extends an easing cycle that began in March, when the institution cut 25 basis points.”

via Bloomberg