Building Resilience to Global Risks: Challenges for African Central Banks

19 Pages Posted: 7 Sep 2017

Date Written: August 2017

Abstract

The policy response of many African commodity exporting economies to the slump in commodity prices after mid-2014 has been markedly different from that of commodity exporters elsewhere. First, few African countries allowed their currency to depreciate as much as other EMEs, for instance in Latin America. Instead they resorted mainly to administrative controls, despite the high economic costs associated with such measures. Second, many African economies kept their policy rates very low despite considerable exchange rate pressure and rising inflation. Again, this differs from the response of many Latin American commodity exporters, who raised policy rates in order to keep inflation expectations anchored. Finally, many African economies have been less successful than other EMEs in shielding their banks from the fallout of lower commodity prices, sharp depreciation and feeble growth.

Keywords: African economies, exchange rate policy, commodity prices

JEL Classification: E58, F32, F62

Suggested Citation

Christensen, Benedicte Vibe and Upper, Christian, Building Resilience to Global Risks: Challenges for African Central Banks (August 2017). BIS Paper No. 93, Available at SSRN: https://ssrn.com/abstract=3025493

Christian Upper (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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