JOHANNESBURG, Mar 14 – Policymakers across Africa have warned that a sharp rise in global oil prices linked to the conflict involving Iran could disrupt monetary policy plans and threaten the continent’s economic recovery.
In recent months, central banks across several African economies had begun lowering interest rates as inflation pressures eased and foreign exchange markets stabilised. The easing cycle was aimed at supporting economic growth.
However, the surge in oil prices may now force many policymakers to reconsider that strategy.
Officials say higher energy costs could push inflation higher again while increasing operational costs in key sectors such as mining, agriculture and manufacturing.
The Bank of Uganda said periods of heightened global uncertainty have become a defining feature of the international economic landscape, presenting new challenges for central banks.
Uganda’s central bank noted that it is reassessing its policy tools and processes to ensure they remain effective in the current environment.
Meanwhile, the Banco Nacional de Angola kept interest rates unchanged this week after three consecutive cuts. Governor Manuel Tiago Dias cited rising geopolitical risks as a key factor behind the decision.
Dias warned that a prolonged conflict in the Middle East could disrupt supply chains, particularly those related to agricultural inputs and fertilisers.
Analysts say other major African central banks may soon pause their easing cycles as well.
Economies including Ghana, Nigeria, Zambia and Kenya are widely expected to reassess their monetary policy outlook if high oil prices persist.
Razia Khan, chief economist for the Middle East and Africa at Standard Chartered, said policymakers will need to evaluate the potential “pass-through” effects of higher oil prices into broader inflation levels.
Financial institutions are already adjusting their forecasts. JPMorgan said it has reduced expectations for future interest rate cuts in several African economies, including Nigeria, Kenya, Ghana and Zambia.
Meanwhile, global benchmark Brent crude was trading just below $100 per barrel on Friday after reaching nearly $120 earlier in the week.
According to Charlie Robertson of FIM Partners, sustained oil prices around $100 per barrel could weaken many African currencies and reduce foreign exchange reserves across the continent.
