The Central Bank of Nigeria (CBN) is at a crossroads, deciding whether to continue raising the benchmark interest rate or hold it steady to observe the effects of previous increases. This debate is the focus of the Monetary Policy Committee (MPC) meeting starting today, led by Governor Olayemi Cardoso.
At its last meeting in March, the MPC raised the Monetary Policy Rate (MPR) by 200 basis points to 24.75%, following a 400 basis point increase in February. This cumulative rise of 600 basis points aimed to curb soaring inflation. Recent data shows a slight slowdown in inflation, with the Consumer Price Index (CPI) rising by 0.49 percentage points to 33.69% in April, the slowest increase since June 2023.
Experts are divided on the next steps. Some suggest continuing with rate hikes to further control inflation, while others recommend pausing to let the effects of previous hikes settle in. If a rate hike occurs, analysts predict a smaller increase of about 100 basis points, potentially bringing the MPR to 25.75%. The CBN’s decision will significantly impact Nigeria’s economy and financial markets.
Source: THE NATION