Slowing inflation give CBN privilege to retain key rate- Analysts

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Policy rate: 11.5%
Inflation rate: 15.99% (Oct.)
Inflation target: 6%-9%

Slowing inflation should give Nigeria’s central bank room to leave its key rate steady for a seventh straight meeting and continue to support an economy that’s struggling to recover from its biggest contraction in three decades in 2020.

“It is evident that policy makers are focusing more on mitigating the risk from weaker growth, rather than the pressure of accelerated prices,” said Ikemesit Effiong, head of research at SBM Intelligence.

“Since the turn of the year, supply chain issues have made inflation a global issue not peculiar to the Nigerian environment and cutting rates will not do much in protecting the Nigerian consumer from potential price rises, hence our thinking that rates will hold.”

While the central bank has made it clear that it’ll only effectively shift to taming price growth once it’s comfortable with output growth, there’s a chance that Fed tapering could prompt it to raise the benchmark by 50 basis points this month, warned Ibukunoluwa Omoyeni, an economist at Vetiva Capital Management Ltd.