Nigeria Monetary Policy September 2018

Nigeria

Nigeria: Central Bank holds policy rate in September

September 25, 2018

At its 24–25 September meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) decided to leave the monetary policy rate as well as all other monetary policy parameters unchanged, meeting market expectations. As a result, the policy rate remains at a record-high 14.00%, with the asymmetric corridor at plus 200 and minus 500 basis points around the monetary policy rate. In addition, the Committee left the liquidity ratio unchanged at 30.00% and the cash reserve ratio stable at 22.50%. Notably, three MPC members voted to raise the policy rate and three voted to raise the cash reserve requirement due to high inflationary pressures.

The Bank’s decision to keep monetary policy tight reflects stubbornly high price pressures in Nigeria’s economy. Inflation, although having receded somewhat, has lingered well above the Bank’s target of 6.0%–9.0% all year, and risks to the outlook have intensified in recent months. Specifically, pre-election spending, flooding and the farmer-herdsmen conflict in key food-producing states are threatening to keep price pressures high, while capital outflows have dented the Central Bank’s international reserves. That said, better harvests in the coming months could help relieve some pressure on prices. Meanwhile, the economic backdrop is somber with fragile growth dynamics seen in the first half of the year. In the accompanying statement, the Bank called on the government to fast track the implementation of the 2018 budget to give a needed boost to the economy.

Looking forward, the Bank struck a cautious tone in its communiqué, citing growth headwinds and high inflationary pressures. However, the Bank ultimately decided against hiking the policy rate to avoid derailing the economic recovery. The Bank also added that it was taking a wait-and-see approach until there is a clear view of the timing of liquidity injections from the government to support growth. The next Central Bank meeting is scheduled for 19 and 20 November.

FocusEconomics Consensus Forecast panelists expect the monetary policy rate to end 2019 at 12.17%. In 2020, the panel sees the monetary policy rate ending the year at 11.04%.


Author:,

Sample Report

Looking for forecasts related to Monetary Policy in Nigeria? Download a sample report now.

Download




Nigeria Economic News

  • Nigeria: Inflation continues downward trend in September

    October 15, 2021

    Consumer prices rose 1.15% in September, up from August’s 1.02% increase.

    Read more

  • Nigeria: PMI edges up in September

    October 4, 2021

    Operating conditions in Nigeria’s private sector improved at a fractionally stronger pace at the close of the third quarter, with the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) inching up to 52.3 in September from 52.2 in August.

    Read more

  • Nigeria: Central Bank stays put in September

    September 17, 2021

    At its 16–17 September meeting, the Monetary Policy Committee of the Central Bank of Nigeria decided to leave all policy parameters unchanged, keeping the monetary policy rate at 11.50%, the asymmetric corridor at plus 100 and minus 700 basis points around the monetary policy rate, the cash reserve ratio at 27.50%, and the liquidity ratio at 30.00%. In deliberating its decision, the Committee noted that inflation has continued to decline, and the economic recovery has seemingly gained traction in the second and third quarters.

    Read more

  • Nigeria: Inflation ticks down to seven-month low in August

    September 16, 2021

    Consumer prices rose 1.02% in August, up from July’s 0.93% increase.

    Read more

  • Nigeria: PMI dips in August

    September 3, 2021

    Private sector business conditions in Nigeria improved at a softer pace in August, with the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) dropping to 52.2 from the 18-month high of 55.4 in July.

    Read more

More news

Search form