How Emerging Market Turmoil Is Affecting Central Banks In Africa

Central banks around Africa -- poised to reveal their first response to the emerging-market turmoil of the past month -- are likely to usher in an end to the continent’s easing cycle.

There’s a week to go before the U.S. Federal Reserve delivers what could be its third interest-rate increase of the year.

Currency weakness from the wider market sell-off preceding that move and a pickup in inflation may persuade officials to freeze borrowing costs -- and in some cases even start to talk about tightening.

Central bankers in Nigeria, Ghana and Kenya are likely to keep key rates unchanged at their meetings next week. This Thursday, South African officials are seen by some economists as open to a potential hike.

Russia raised its key rate by 25 basis points, while Turkish regulators increased the rate by 625 basis points.

“We are slowly seeing the effects of recent emerging-market events in the rest of Africa,” Celeste Fauconnier, an analyst at FirstRand Ltd.’s Johannesburg-based Rand Merchant Bank unit, said. “It’s safe to say the cutting trend in most of Africa is over. We’re unlikely to see a reaction like that of Turkey and Russia, but the chances of further rate cuts are very slim.”

Here’s a round-up of what the continent’s central bankers are dealing with.