By 
The U.S. Federal Reserve is widely expected to keep interest rates unchanged this week, with Chair Jerome Powell likely to signal a cautious policy stance amid persistent concerns over tariff-driven inflation.
Although some dissent may arise from officials such as Governor Chris Waller and Vice Chair Michelle Bowman, analysts at Access Bank Zambia noted that Fed funds futures are pricing in nearly four rate cuts over the next 12 months.
A potential shift toward looser U.S. monetary policy is seen as positive for African currencies.
“Lower U.S. interest rates will ease the burden on African central banks, enabling them to reduce rates without triggering currency depreciation due to narrowing interest rate differentials,” the analysts said.
A weaker dollar typically reduces pressure on risk-sensitive African currencies, potentially supporting appreciation.
It also tends to boost global commodity prices, improving the terms of trade for resource-rich African economies.
Cheaper borrowing costs in global markets could enhance dollar liquidity across Africa, easing persistent hard-currency shortages that often weigh on local exchange rates.
“Furthermore, looser global monetary conditions will attract capital inflows into higher-yielding frontier markets, easing pressure on African currencies,” Access Bank analysts added.
With the global policy narrative shifting from prolonged tightening to increased liquidity, analysts believe African economies stand to benefit significantly.
“The expected Fed rate cuts in the coming months signal a brighter outlook for African currencies, which are likely to experience less strain in the quarters ahead,” they said.
WARNING! All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express permission from ZAMBIA MONITOR.
Comments