African Central Banks Cut Rates as Inflation Eases

## What's New

African central banks are cutting interest rates as inflation moderates across major economies. Kenya has cut rates nine consecutive times; Nigeria just delivered a 50bp cut; South Africa is signaling a shift to a lower inflation target.

Why It Matters

Lower rates mean cheaper credit for businesses and consumers—critical for economies where high borrowing costs have constrained growth. The coordinated easing could reinvigorate investment and support the World Bank's projected 3.8% regional growth for 2025.

The Details

Kenya - **Benchmark rate:** Cut to 9%—lowest since early 2023 - **Inflation:** 4.5% in November, below the 5% target midpoint - **Outlook:** Risk-Based Credit Pricing Model planned for 2026 rollout to improve credit flow

Nigeria - **Benchmark rate:** Cut 50bp to 27% (from 27.5%) - **Inflation:** Down to 20.12% from 33.4% a year ago—significant progress - **Reserves:** $40.1 billion (9.5 months import cover) - **Growth:** 3.4% GDP growth expected; economy rebased 30% larger than previously measured - **Capital markets:** Raised $2.2B in first eurobond since 2022

South Africa - **Inflation:** Averaging 3.1% for 2025, expected to settle at 3.3% - **Policy shift:** SARB moving from inflation band to 3% point target with 1% tolerance - **Rate outlook:** Repo rate could reach 6% by 2027 - **Challenge:** PMI at 49 (contraction); only 0.8% growth expected

Regional Outlook

The World Bank projects regional growth to reach 3.8% in 2025 (up from 3.5% in 2024) and accelerate to 4.4% average in 2026-2027.

Sources

• [Finance in Africa: How central banks recalibrated rates](https://financeinafrica.com/insights/africas-central-banks-interest-rates-in-2025/)
• [Global Finance: Central Banker Report Cards 2025](https://gfmag.com/economics-policy-regulation/central-banker-report-cards-2025-africa/)
• [Deloitte: South Africa economic outlook](https://www.deloitte.com/us/en/insights/topics/economy/emea/africa-economic-outlook.html)
• [AfDB: African Economic Outlook 2025](https://www.afdb.org/en/news-and-events/press-releases/african-economic-outlook-2025-africas-short-term-outlook-resilient-despite-global-economic-and-political-headwinds-84038)