Some of Africa’s biggest central banks are pausing their rate-cut cycles as the escalating Middle East crisis fuels a fresh oil-price shock, complicating inflation and monetary policy outlooks across the continent.

Policymakers in South Africa, Angola, Morocco and Mozambique have all opted to hold interest rates in the past three weeks, signalling a coordinated shift from easing to caution as Brent crude climbs above $100 per barrel following the Iran war.

In South Africa, the continent’s most industrialised economy, the central bank kept its benchmark repo rate unchanged at 6.75 percent on Thursday for a third time since September, effectively extending a pause in what had been an anticipated easing cycle.

Governor Lesetja Kganyago said the decision reflects rising global uncertainty and the risk that higher oil prices could feed into domestic inflation.

The move leaves the prime lending rate at 10.25 percent.

Although inflation has remained contained—slowing to three percent in February from 3.5 percent in January and sitting at the lower bound of the central bank’s 3–6 percent target range—the external environment has become more volatile.

Fuel prices are expected to rise sharply in April, with estimates suggesting increases of between R5 and R9 per litre for petrol and diesel, unless mitigating measures are introduced.

Caution spreads across the continent

Elsewhere, African central banks are similarly prioritising stability over further easing.

Angola’s central bank held its benchmark rate at 17.5 percent earlier in the month, marking its first pause after three consecutive cuts, as inflation eased to 13.35 percent in February—the lowest level since July 2023—supported by a relatively stable kwanza.

Morocco extended its rate hold to a fourth straight meeting, keeping its benchmark rate at 2.25 percent. Policymakers pointed to resilient economic growth, contained inflation and rising global uncertainty.

The North African economy is estimated to have grown by 4.8 percent in 2025, with projections of 5.6 percent growth this year, largely driven by improved agricultural output. Inflation has also softened, with mild deflation recorded since November.

Mozambique has also paused its easing cycle, keeping its MIMO rate at 9.25 percent. The central bank cited rising inflation risks linked to severe flooding, post-election unrest, increasing public debt, and the shutdown of a major aluminium smelter.

Inflation in the country edged up to 3.2 percent in February from 3.04 percent in January, driven by higher food, clothing and service costs following cyclone-related disruptions.

Ghana bucks the trend

Ghana remains the notable outlier, continuing to ease monetary policy despite growing external risks.

The Bank of Ghana cut its policy rate by 150 basis points to 14 percent at its second Monetary Policy Committee meeting of the year, marking its fifth consecutive rate cut and bringing rates to their lowest level since October 2021.

However, the smaller size of the latest cut—compared to earlier reductions of 250 to 350 basis points—signals increasing caution as the easing cycle matures.

Headline inflation slowed to a 25-year low of 3.3 percent last month, though policymakers warned that higher global energy prices and base effects could reverse some of the gains.

Oil shock reshapes policy outlook

The resurgence in oil prices is emerging as a key risk to the continent’s disinflation trajectory, with potential spillovers into exchange rates, fiscal balances and borrowing costs.

“Rising inflation, driven in part by fuel price spikes, could place upward pressure on interest rates and increase the cost of financing transactions,” said Marylou Greig, editor of DealMakers Africa, a South African based Mergers and Acquisitions firm.

“At the same time, major African economies face heightened exposure to currency volatility, which can complicate deal structuring and valuation.”

With global uncertainty intensifying, analysts say African central banks are likely to remain in a holding pattern in the near term, delaying further rate cuts until the impact of the oil shock becomes clearer.