Why are interest rates so high across the world?

Interest rates in the U.S, Eurozone or UK are at a decade-high in direct response to excessive inflationary pressures which arose since the COVID-19 pandemic era. African countries have not been spared either and have faced abnormally high rates of inflation, piling pressure on their domestic currencies. But with inflation now more under control in 2024 across these developed economies, it is strongly expected that these major central banks will start cutting interest rates soon.

What did African Central Banks do?

In the past two years, many central banks across Africa have implemented unprecedented interest rate hikes. These increases are a direct reaction to global inflation and domestic currency volatility issues. Yet, inflation still remains above-target in some African regions, so interest rates are likely to remain unchanged or potentially increase further.

Interest Rates in Africa

Interest Rates in Africa

How did it help?

• In South Africa, the inflation rate fell from its peak of 7.8% in July 2022 to 5.2% in April 2024. The South African rand has maintained stability versus the US dollar this year.
• In 2024, the Kenyan shilling appreciated by almost 17% against the US dollar, making it one the best-performing currency against the greenback.
• Ghana’s annual inflation rate eased from 43.1% in July 2023 to 25% in April 2024.