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Kenya’s central bank maintains benchmark lending rate amid reports of steady inflation

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To maintain exchange rate stability, Kenya’s central bank maintained its benchmark lending rate at 13.0% on Wednesday while stating that inflation was stable within its near-term goal range.

After holding its rate steady in April, the bank is holding its rate for the second consecutive time. To help contain persistent inflation and stabilise the currency rate, the bank raised rates in December and February.

“The Monetary Policy Committee (MPC) concluded that the current monetary policy stance will ensure that overall inflation remains stable around the mid-point of the target range in the near term while ensuring continued stability in the exchange rate,” the central bank said in a statement.

The bank aims to assist in guiding short-term market interest rates toward the central bank policy rate, the bank unveiled a new interest rate corridor in August. The rate was fixed at the policy rate plus or minus 250 basis points.

It announced on Wednesday that it has also changed the discount window rate from 400 basis points above the central bank rate to 300 basis points. When commercial banks borrow from the regulator as a last resort, they pay the discount window rate.

After the government successfully raised $1.5 billion from international markets in February to partially buy back another bond that is expiring in June, the value of the Kenyan shilling vs the US dollar has stabilized.

After staying for months on the higher end of the government’s targeted range of 2.5-7.5%, inflation increased a little to 5.1% in May from 5.0% in April.

According to official figures, Kenya’s economy expanded by 5.6% in 2023 compared to 4.9% in the year before.

Despite the consequences of massive flooding earlier in the year, the central bank stated that it anticipates strong economic development in 2024.

“The economy is expected to remain strong in 2024, supported by the resilient services sector, robust performance of the agriculture sector, and continued implementation of government measures to boost economic activity across priority sectors,” it said.

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As inflation slows down, Angolan central bank maintains stable interest rate

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The central bank of Angola maintained its main interest rate at 19.5% on Friday, noting a possible short-term improvement in the supply of necessities and a possible decrease in inflation.

To contain growing inflation, which has reached 30%, the Bank of Angola hiked its main rate by 50 basis points at its most recent monetary policy meeting in May after raising it by 100 basis points in March.

The annual inflation rate increased last month, from 30.16% in May to 31.00%, although at a slower rate than in prior months.

“The decision (on Friday) was motivated by the prospect of a slowdown in the rate of price growth and an improvement in the supply of essential goods,” said Central Bank Governor Manuel Tiago Dias.

“If current conditions prevail from August onwards, we predict a slowdown in year-on-year inflation,” Tiago Dias added.

Since the middle of last year, inflation has been increasing in the nation that produces oil in Africa.

By September, the central bank will make its next move on monetary policy.

 

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Bean disease affects 81% of major cocoa region in Ghana

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The International Cocoa Organisation (ICCO) reports that 81% of a significant cocoa-producing region in Ghana, the second-largest cocoa grower in the world, is affected by swollen shoot disease.

Due to unfavourable weather and disease in leading cocoa-producing countries, Ghana and Ivory Coast, prices for the ingredient used in chocolate have nearly doubled this year.

However, expectations are growing for better production the following season. About 60% of the cocoa produced worldwide is produced by the two nations combined.

 

The data on bean disease in Ghana’s Western North, the country’s third-largest cocoa-producing region by output, cast doubt on hopes for a production rebound partly because they show how severe the outbreak is still.

Usually, within a few years, the swollen shoot virus first lowers yields before killing trees. Cocoa cannot be replanted until the sick trees are removed and the soil is treated.

The ICCO reports that 330,456 hectares of Ghana’s 410,229-hectare Western North region are contaminated. The intergovernmental agency was using information from Ghana’s cocoa sector regulator, Cocobod, through its Cocoa Health and Extension Division (CHED).

 

At an industry gathering in April, Joseph Aidoo, the chief executive of that industry regulator, said Reuters that 500,000 hectares nationwide—or 25.7% of Ghana’s 1.94 million hectares of cocoa-growing land—were afflicted.

He claimed that an additional 100,000 hectares are unproductive because of old trees and that the nation has already treated an additional 100,000 hectares, opening a new tab for swollen shoot. Replanted trees require two to four years to reach maturity and yield beans following rehabilitation.

 

“Swollen shoot is a serious problem that’s not improved in the last 12 months and is not going away,” said Steve Wateridge, a veteran world expert on cocoa and head of research at Tropical Research Services by Expana.

The Ivory Coast’s authorities have been more cautious about disclosing the full scope of the outbreak to the public, but the ICCO said that swollen shoot is also spreading there. Wateridge previously informed Reuters that the infection probably affected up to 30% of Ivorian cocoa plants.

Ghana usually produces more than 800,000 tons of cocoa annually, but due to smuggling, disease, aged trees, illegal gold mining, and climate change, it is predicted to produce just over half that amount this season.

 

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