Nigeria Monetary Policy November 2021


Nigeria: Central Bank stays put in November; suggests stance will remain unchanged in the months ahead

November 23, 2021

The Monetary Policy Committee of the Central Bank of Nigeria (CBN) stood pat at its 22–23 November meeting, leaving all policy parameters unchanged. As such, the monetary policy rate was kept 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%.

The Bank’s decision continued to reflect a balancing act between managing upside risks to the inflation outlook and downside risks to the economic recovery. The Committee noted that while inflation has remained elevated in recent months, it has continued to moderate, attributing the downward path to easing food and core price pressures. A hike would help to further rein in inflation, but the Bank nevertheless felt that “tightening will increase the cost of funds and constrain output growth”. On the other hand, loosening the monetary policy stance would buoy economic activity; however, it would also further stoke price pressures. All in all, the Committee thus decided to hold rates steady in order to achieve its “mandate of price stability that is conducive for sustainable growth”.

In its press release, the Bank hinted that it will maintain its current stance in the months ahead, adding that a continuation of the current stance would enable it “to carefully appraise the implications of the unfolding global development around policy tapering and normalization by advanced economies”. That said, inflation is forecast to remain above the Bank’s 6.0%–9.0% target band throughout the forecast horizon. FocusEconomics Consensus Forecast panelists therefore expect the Bank to embark on a tightening cycle next year to cool inflation more forcefully.

The next meeting will be held in early 2022.

FocusEconomics Consensus Forecast panelists project the monetary policy rate to end 2022 at 12.14%. In 2023, the panel sees the monetary policy rate ending the year at 12.79%.

Author:, Economist

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Nigeria Monetary Policy Chart

Nigeria Monetary Policy November 2021

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

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