MPC MAY LOWER INTEREST RATES AMID FALLING INFLATION
Analysts anticipate that the Central Bank of Nigeria's (CBN) Monetary Policy Committee (MPC) may reduce the benchmark interest rate as they meet to deliberate on the country's financial conditions. The two-day meeting, which begins today, comes on the heels of two consecutive months of declining inflation, prompting speculation that the CBN might adopt a less aggressive stance.
Mr. Charles Sanni, Managing Director of Cowry Treasurers, stated that with inflation trending downward, the MPC could be motivated to cut interest rates, which currently stand at 26.75%. This reduction would follow the CBN's recent decision to lower Treasury Bills rates, signaling a possible shift towards easing financial conditions for businesses.
The central bank's interest rate hikes over the past year have been aimed at controlling rising inflation, which hit a 28-year high of 34.19% in June 2024. However, inflation decelerated to 32.15% in August, giving room for potential adjustments in the lending rates.
Professor Richard Mayungbe of Copperstone University, Zambia, pointed out that the previous rate hikes had reached an "overkill" level and that a reduction would support industries in expanding and creating jobs.
Despite these perspectives, some analysts, like Proshare's Chief Economist Teslim Shitta-Bey, expect the MPC to retain the current rates to ensure that inflation continues to fall. He highlighted that a cautious approach might be necessary, either maintaining or slightly increasing rates to sustain the downward trend in inflation.
The MPC has raised interest rates by 50 basis points in each of its four consecutive meetings since February, with the current rate at 26.75%. Whether the committee chooses to cut or retain the rate, today's meeting is crucial for shaping Nigeria's short- and medium-term monetary policy.
Analysts anticipate that the Central Bank of Nigeria's (CBN) Monetary Policy Committee (MPC) may reduce the benchmark interest rate as they meet to deliberate on the country's financial conditions. The two-day meeting, which begins today, comes on the heels of two consecutive months of declining inflation, prompting speculation that the CBN might adopt a less aggressive stance.
Mr. Charles Sanni, Managing Director of Cowry Treasurers, stated that with inflation trending downward, the MPC could be motivated to cut interest rates, which currently stand at 26.75%. This reduction would follow the CBN's recent decision to lower Treasury Bills rates, signaling a possible shift towards easing financial conditions for businesses.
The central bank's interest rate hikes over the past year have been aimed at controlling rising inflation, which hit a 28-year high of 34.19% in June 2024. However, inflation decelerated to 32.15% in August, giving room for potential adjustments in the lending rates.
Professor Richard Mayungbe of Copperstone University, Zambia, pointed out that the previous rate hikes had reached an "overkill" level and that a reduction would support industries in expanding and creating jobs.
Despite these perspectives, some analysts, like Proshare's Chief Economist Teslim Shitta-Bey, expect the MPC to retain the current rates to ensure that inflation continues to fall. He highlighted that a cautious approach might be necessary, either maintaining or slightly increasing rates to sustain the downward trend in inflation.
The MPC has raised interest rates by 50 basis points in each of its four consecutive meetings since February, with the current rate at 26.75%. Whether the committee chooses to cut or retain the rate, today's meeting is crucial for shaping Nigeria's short- and medium-term monetary policy.