MPC seen retain benchmark rate at 11.5% with focus to tackle rising inflation

Date:

Policy rate: 11.5%
Inflation: 14.2% (October)

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High food prices have kept Nigerian inflation above target since 2015

After a surprise 100 basis point interest-rate cut in September, Nigeria’s central bank will probably leave its benchmark rate on hold as it tries to support growth in Africa’s largest economy.

While the MPC is unlikely to change its short-term policy stance, naira depreciation and rising costs suggest upside risks to inflation forecasts, said Yvonne Mhango, a sub-Saharan Africa economist at Renaissance Capital.

Foreign exchange restrictions have helped keep the currency under pressure, while border closures, violent farm attacks, and clashes between herders and farmers are driving up food prices.

Post COVID19 economic crisis
Following aggressive interest rate cuts when coronavirus restrictions shut down output, African central bankers meeting for the final time this year may find that they’ve exhausted their monetary-policy options.

Activity has improved as economies reopen, yet balancing the threat of resurgent infections against inflation that’s on the rise means most policy makers in the region will probably hold rates as they seek to support economic growth. That’s as fiscal space remains limited and relatively depressed commodity prices continue to weigh on exporters.

“Although African central banks maintain that they still target inflation, it is clear that the focus this year has shifted firmly to growth,” said Ayomide Mejabi, chief economist for sub-Saharan Africa at JPMorgan Chase Bank NA. “We expect that to continue well into next year, but the space for formal policy rate cuts is narrowing.”

Godwin Okafor
Godwin Okaforhttps://naija247news.com
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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