(Bloomberg) -- The measures the US Federal Reserve is taking to rein in inflation in the North American nation may push the global economy into recession, according to Central Bank of Kenya Governor Patrick Njoroge.

The Fed had been “slow in moving out of the blocks” to fight inflation, misjudging price growth as transitory and has now to do a lot more to get the same impact, which means frontier and emerging economies have to do a lot more to deal with spillovers, Njoroge said at the Bloomberg forum for emerging and frontier markets in New York on Thursday.

Emerging markets from Ghana to Kenya are bearing the brunt of Federal Reserve Chair Jerome Powell’s move to raise borrowing costs, which is weakening currencies across the world and increasing debt-servicing costs. The Fed’s signal on Wednesday that it could tolerate a recession as a necessary trade-off for regaining control of inflation means the global economy could go “deep into recession,” Njoroge said. 

“The biggest loss is one of credibility,” Njoroge said. “Whatever they do, they have to restore credibility. Central bankers’ only currency is credibility.” 

While Kenya’s economy will take a hit, authorities still expect growth of as much as 5.5% this year, he said.

Bet on Africa

Rising US interest rates have effectively locked frontier markets out of capital markets, Njoroge said, urging investors to consider fundamentals rather than “hype.” He cited the eurobonds Kenya raised in June 2021 at 6.3% as a fair price when asked about the maximum interest rate Kenya can bear.

“Take a long-term bet on Africa, on Kenya. The three-year horizon is killing us,” he said.

While Kenya will need to return to the eurobond market soon, its mind is set on green financing, Njoroge said, without giving any timelines. 

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