As concerns mount globally over soaring inflation, analysts are divided on whether or not the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) will hike the benchmark interest rate-the Monetary Policy Rate (MPR)- at the end of its two-day meeting tomorrow, findings by New Telegraph show.
Last Monday, the National Bureau of Statistics (NBS) re-leased its “Consumer Price Index April 2022” report, which showed announced that inflation rose for the third consecutive month to 16.82 per cent(year-on-year) in April from 15.92 per cent in March. The April inflation rate is the highest since August 2021, when it was 17.01 per cent, an indication that the global inflation surge, occasioned by Russia’s invasion of Ukraine, is also affecting Nigeria.
In his presentation at the May edition of the Lagos Business School (LBS) Executive Breakfast Session, the Chief Executive Officer, Financial Derivatives Company (FDC), Mr. Bismarck Rewane, stated that global central banks were becoming more aggressive in the fight against inflation, noting that 18 out of 21 countries had raised interest rates so far in May.
He said that the CBN “will be under pressure to hike interest rate due to global tightening,” adding that the “MPC likely to raise rate by 100bps to 12.5% per cent pa.” However, Bloomberg last week reported analysts as saying that they expected the CBN to be among five of eight major apex banks on the continent that will likely hold interest rates in this week and next as part of measures “ to shore up their sickly economies, even as inflation pressures build.”
The financial news agency stated: “The Central Bank of Nigeria’s (CBN) reconstituted Monetary Policy Committee (MPC )will probably stick to its policy of only making adjustments to borrowing costs once the economy’s recovery is on a sustainable path. That should see it leave the benchmark interest rate steady for a 10th consecutive meeting, even as inflation has been ticking up this year.
“Choked supply chains, partly due to Russia’s invasion of Ukraine, and surging diesel costs are placing upward price paypressures on Africa’s largest economy. They are also hindering its recovery, as are security challenges in its northern foodgrowing regions and persistent oil production troubles.”
It also quoted Ikemesit Effiong, Head of Research at SBM Intelligence, as saying: “The CBN has consistently maintained a dovish monetary stance in the face of structural and policy-induced headwinds, and if anything, the souring of the global macroeconomic environment will only incentivise it to double down on holding