Money in Nigeria
Nigeria - Money
Central Bank holds policy rate stable in July
At its 22–23 July meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) unanimously decided to leave the monetary policy rate as well as all other monetary policy parameters unchanged, in line with market expectations. As a result, the policy rate remains at 13.50%, after having been unexpectedly cut from a record-high 14.00% in the March meeting, 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 at 30.00% and the cash reserve ratio at 22.50%.
The Bank’s decision was mainly motivated by the persistence of elevated price pressures. Although inflation eased to 11.2% in June (May: 11.4%), it has remained well above the Bank’s target range of 6.0%–9.0% for over three years now. Moreover, structural factors such as high costs for electricity, transport and production inputs as well as security challenges that pose risks to food supply have kept price pressures high. On the activity front, recent PMI readings have fared well but still point to only modest economic growth so far. Overall, the MPC deemed that tightening policy could hinder banks’ capacity to extend credit, which remains a key objective for the Bank, while a rate cut could increase liquidity notably, particularly through consumer loans, that without a corresponding adjustment in output, could stoke price pressures. Thus, its decision to remain on hold.
Looking ahead, the Bank expects inflation to continue trending downwards, especially as the start of the harvest season dampens food inflation. Furthermore, it highlighted that the recent measure of raising banks’ loan-to-deposit ratios would increase credit delivery to the private sector, helping boost investment and growth. It would wait and see, however, how recent actions to stimulate lending impact the economy before deciding on whether to modify its policy stance.
The next Central Bank meeting is scheduled for 23–24 September.
FocusEconomics Consensus Forecast panelists expect the monetary policy rate to end 2019 at 13.14%. In 2020, the panel sees the monetary policy rate ending the year at 12.57%.
Nigeria - Money Data
|Money (annual variation in %)||1.3||20.6||5.9||17.8||2.3|
5 years of economic forecasts for more than 30 economic indicators.
Nigeria Money Chart
Source: Central Bank of Nigeria
|Bond Yield||13.53||0.0 %||Jul 31|
|Exchange Rate||306.3||3.08 %||Jul 31|
|Stock Market||0.1||0.0 %||Jul 31|
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August 16, 2019
Consumer prices rose 1.01% on a month-on-month basis in July, down marginally from June’s 1.07% climb.
August 5, 2019
The Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) inched down from 54.8 in June to 54.6 in July.
July 23, 2019
At its 22–23 July meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) unanimously decided to leave the monetary policy rate as well as all other monetary policy parameters unchanged, in line with market expectations.
July 15, 2019
Consumer prices rose 1.07% on a month-on-month basis in June, down slightly from May’s 1.11% climb, which had marked the sharpest increase in nearly a year.
July 3, 2019
The Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) climbed to 54.8 in June from 52.9 in May, which had marked the lowest reading since June 2017.