A poll analysts predicted rates would stay on hold at 14 percent.
Thank you for reading this post, don't forget to subscribe!Meanwhile Nigerian naira is expected to trade little changed next week as investors await the central bank’s decision on interest rate on Tuesday, which could affect portfolio inflows and currency market liquidity.
The naira traded at around 360 to the dollar on Thursday for investors, who have been offering to sell the U.S. currency at 365 naira, close to the black market rate of 367.
On the official market, the naira is quoted at 306, a level at which the central bank has been selling $500,000 daily to lenders to clear matured letters of credit, traders say.
However, there is increased pressure on the CBN to reduce the MPR due to positive GDP growth by 0.55% in Q2’17, decline in headline inflation rate to 16.05% and the election cycle around the corner. If this happens, we expect shortterm interest rates to decline and market liquidity to increase.
Inflation Rate
Headline inflation eased marginally to 16.01% in August, declining for the seventh consecutive month in 2017. This implies that base year effects are waning. However, the core inflation rate moved in the opposite direction with headline inflation, increasing by 0.1% to 12.3% in August. The contributions with the highest increases were pharmaceutical products and maintenance, clothing materials, furniture and furnishings, nondurable household goods, books and stationary, shoes and other footwear, motorcycles, and passenger transport by air.
The upward trend in the food basket was bucked as food inflation declined marginally to 20.25% from 20.28% yearonyear in the month of July. Although there was a decline in food inflation, it is still above 20%, due to poor weather conditions in specific northern states reducing agricultural produce. Highest increases recorded in price level of the food basket included meat, fish, bread and cereals, vegetables, coffee, tea and cocoa, and milk, cheese and egg. Meanwhile, imported food inflation rose marginally to 14.42% from 14.11% in July, which could be linked to the currency volatility in the exchange rate market