“Analysts Expect Pause in Nigeria’s Interest Rate Hikes for Economic Assessment”


CBN Hikes Rates by 150bps to Combat Inflation, Surpassing Expectations

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On Tuesday, the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) concluded its two-day policy meeting by raising the monetary policy rate (MPR) by 150 basis points to 26.25%, up from 24.75%.

This marks the third consecutive hawkish move this year, exceeding expectations of a 100 basis points increase.

The MPC’s decision follows a review of local and global economic developments and an assessment of risks to the economic outlook. The committee aims to combat rising inflation and maintain monetary and price stability in the economy.

Key decisions from the meeting include:
1. Raising the MPR by 150 basis points to 26.25%.
2. Retaining the asymmetric corridor around the MPR at +100/-300 basis points.
3. Maintaining the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45%.
4. Keeping the Liquidity Ratio at 30%.

The CBN’s inflation-targeting approach is in response to the latest data from the National Bureau of Statistics (NBS), which showed headline inflation rising to 33.69% year-on-year in April, driven by increases in food and core inflation.

Despite concerns that a continued contractionary stance could hamper real sector growth and investment, the MPC noted positive signs that previous rate hikes are yielding desired outcomes.

This aggressive move is intended to rein in inflation and ensure price stability, even as it challenges economic growth amid a weakening naira and high import costs.

Analysts at Cowry Research suggest that the CBN’s decisive action reflects a commitment to achieving a single-digit inflation target and domestic price stability.

They anticipate a potential pause in rate hikes at the next MPC meeting in July to assess the cumulative impact on the economy and balance inflation control with growth objectives.

Godwin Okafor, The Naija247news
Godwin Okafor, The Naija247newshttps://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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