The central bank of Nigeria promises to maintain strict policy as it holds the key rate once more
Nigeria’s central bank promised on Tuesday to hold onto its present posture until inflation worries subside, maintaining its monetary policy rate at 27.50% (NGCBIR=ECI) for the third consecutive month.
In June, the oil-producing West African country’s consumer inflation rate (NGCPIY=ECI) dropped for the third consecutive month to 22.22% year over year from 22.97% in May.
The governor of the central bank, Olayemi Cardoso, admitted that inflation was decreasing. He stated the necessity to maintain disinflation was the basis for the Monetary Policy Committee’s decision to establish the rate.
“Maintaining the current monetary stance will continue to address the existing and emerging inflationary pressure,” Cardoso stated, adding that bringing inflation down to single digits was the ultimate goal.
The central bank raised the rate six times in 2024 to combat skyrocketing inflation, which hit 28-year highs last year, but most Reuters polled economists said the rate would remain unchanged.
Since taking office in 2023, President Bola Tinubu has implemented policies that have increased price pressure, such as removing expensive subsidies and devaluing the naira.
After the statistics agency reweighted the inflation basket and changed the base year for its calculations, inflation fell precipitously in January, from 34.80% in December to 24.48% in annual terms.
Since then, though, its fall has slowed.
Energy price moderation and foreign exchange market stability, according to Cardoso, were major factors in the June decline in inflation.
“Despite these positive developments, members (of the MPC) observed the uptick in month-on-month headline inflation, suggesting the persistence of underlying price pressures, the continued global uncertainties,” he said, but added that price pressures could be sustained by geopolitical tensions and tariff wars.
Nigeria continues to face challenges due to consistently high inflation, the World Bank has warned, and it is encouraging the country to maintain strict fiscal and monetary policies.
