Unfazed and under no pressure to raise rates, Nigeria’s Central Bank (CBN) for the first time in years have maintained the benchmark interest rate at 27.50%.
This marks the end of a rate-tightening cycle that began when CBN Governor Yemi Cardoso took office in September 2023. It is also in line with market expectations.
A survey of five economists by Condia predicted a hold of the rates which had been hiked by over 800 basis points in the last two years under President Bola Ahmed Tinubu.
“My stance would still be a hold, “Samuel Onyekanmi, an analyst at Norrenberger told Condia.
“This is because the inflation reduction is a statistical reduction, not an actual reduction in the prices. CBN will not based on that reduce the interest rate, and I believe that MPR at 27.5% has hit its peak.”
Cardoso explained that the committee unanimously decided to retain the MPR at 27.50%.
“The monetary policy noticed with satisfaction recent macroeconomics development which are expected to positively impact price dynamics in the near to medium term,” Cardoso said during the 299th MPC briefing held in Abuja.
“This includes the stability in the foreign exchange with the resultant appreciation of the exchange rate and the gradual moderation in the price of PMS.”
Analysts will be unfazed by the latest MPC dovish stance. This is a result of the rebased inflation figures which were released days ago peaking at 24.48%.
The sharp drop in inflation figures from the previous 34% is sure to keep policymakers happy in the interim and less pressured to tighten interest rates.
Yet, it is poised to unsettle the real economy which has been bearing heightened consumer prices and an artificial currency stability which could be upset in the near to medium-term
