Nigeria Monetary Policy July 2022


Nigeria: Central Bank delivers much larger rate hike than expected in September

September 27, 2022

The Central Bank of Nigeria continued to tighten financial conditions at its 26–27 September meeting, delivering a 150 basis points hike that brought the monetary policy rate up to a record-high 15.50%. The decision surprised market analysts on the upside, as they had expected a 50 basis point hike. Moreover, the decision was not unanimous in terms of size; two members of 12 voted for smaller hikes. In addition, the Bank also increased the cash reserve ratio to 32.5% but retained the asymmetric corridor and the liquidity ratio at their prior levels.

The Committee noted an uptrend in inflation for the seventh consecutive month in August. Lingering security issues, high import costs for essential grains, greater money demand to allow increased pre-election spending, and structural issues added upward pressure on prices. Meanwhile, inflation expectations were fueled by the hike in energy prices, a hike in the electricity tariff, and the scarcity of oil. Turning to the economy, although the Committee expressed concern regarding a contraction in activity, it remained optimistic about the economy’s recovery due to vast monetary and fiscal support, providing room for the rate hike.

While the press release was void of explicit forward guidance, the Bank strongly hinted at more rate hikes. It stated, “that significant focus must be given to taming inflation”. Therefore, the Bank did not consider loosening or holding an option.

The next meeting is scheduled for 21–22 November.

The latest decision took market analysts by surprise and last month FocusEconomics Consensus Forecast panelists projected that the monetary policy rate would end 2022 at 14.79% and 2023 at 14.67%. Panelists are currently taking into account the latest developments. A new FocusEconomics Consensus Forecast report will be released on 18 October.

Author:, Economist

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Nigeria Monetary Policy Chart

Nigeria Monetary Policy October 2022

Note: Monetary policy rate in %.
Source: Central Bank of Nigeria.

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