In the light of apparent fiscal policy limitations, and in a bid to keep the economy running in the wake of the global pandemic, government authorities used the monetary policy measures available to them to salvage their economies from the potential damage of the Covid-19 outbreak while the government focused on providing health care services and other forms of fiscal support to their economies.

Monetary policy took centre stage in many economies as central banks moved to provide emergency support facilities while adopting a broadly loose policy stance in line with global realities. Looking through the spectrum, reductions in policy rate was as high as 500bps in S/Sudan and Zambia, close to 300bps in S/Africa and the Rand Zone, 200 bps in Uganda, 150 bps in Ghana and 200bps in Nigeria (accompanied by massive liquidity injection via OMO maturities. Other measures included direct facilities intervention to SMEs and businesses directly affected by the pandemic, moral suasion to banks to increase or implement a moratorium on existing credits to buffer job losses and limit the financial burden on corporates.

In 2021, we expect monetary policy actions to remain broadly accommodative to spur growth and limit the impact of the pandemic from evolving into a W-shaped growth outcome in the face of limited vaccination for Africans as well as fiscal policy vulnerability. We imagine that monetary authorities will further ease or maintain policy rates at current level till Q2-2021 to allow the economy to recover fully before contemplating tightening from Q3-2021.