Ghana, Egypt lead Africa’s biggest rate cuts as inflation falls
Ghana, Egypt lead Africa’s biggest rate cuts as inflation falls
African countries began easing monetary policy in 2025 after years of aggressive interest-rate hikes used to combat inflation caused by currency devaluations, global supply shocks, and fiscal pressures. As inflation slowed, currencies stabilised, and external reserves improved, central banks across the continent found room to shift focus from inflation control to supporting economic growth.
Inflation declined sharply across Africa, marking one of the continent’s strongest macroeconomic improvements in years. Among the nine largest economies (excluding Algeria), average inflation fell to 10.74 per cent in 2025, down significantly from 16.28 per cent in 2024. The World Bank noted that most sub-Saharan African central banks either cut rates or paused tightening, although it warned that global geopolitical risks and financial volatility could reverse recent gains. Economic growth also showed signs of recovery, with Africa’s GDP growth projected to rise to 3.8 per cent in 2025 and accelerate further in 2026–2027.
Ghana led Africa’s easing cycle, implementing the most aggressive interest-rate cuts. The Bank of Ghana reduced its policy rate by 1,000 basis points to 18 per cent, driven by a dramatic fall in inflation from over 23 per cent at the start of the year to 6.3 per cent in November. Strong fiscal reforms, debt restructuring, higher gold revenues, and a strengthening cedi gave policymakers confidence to unwind earlier emergency measures.
Egypt followed with a substantial easing cycle, cutting rates by a cumulative 725 basis points as inflation eased and foreign currency inflows improved under an IMF-backed reform programme. Annual urban inflation dropped significantly, allowing the central bank to pivot toward stimulating investment and economic activity.
Other major economies also eased policy, though more cautiously. Kenya cut rates by 175 basis points amid stable inflation and a resilient shilling, helping revive private-sector activity. South Africa adopted a gradual approach, cutting rates by 100 basis points as inflation remained within target and weak demand persisted, while unemployment showed modest improvement. Nigeria joined the easing cycle for the first time in five years, making a cautious 50-basis-point cut after inflation moderated and economic conditions stabilised.
Overall, the article highlights a broad shift across Africa in 2025 from restrictive monetary policy toward growth support, made possible by easing inflation and improved macroeconomic stability, though risks from global volatility remain.
Business Day, 30 Dec 2025
