The Nigerian central bank is keeping monetary policy cautious.
Written by Ziad Abdel Fattah:
The Governor of the Central Bank of Nigeria, Olayimi Cardoso, confirmed the gradual decline in rates inflation This opens the door for interest rate cuts in the coming period, but continued geopolitical tensions and external risks are prompting monetary policymakers to hold off before taking any steps towards monetary easing.
Speaking at the BusinessDay conference in Lagos, Cardoso said that Nigeria has recorded a continuous decline in inflation rates over the past 11 months, reflecting the success of the monetary tightening measures adopted by the central bank during the past period.
Expect interest rates to gradually decrease
He added that this trajectory reinforces expectations of a gradual decline in interest rates over time, but stressed that recent global developments, most notably geopolitical tensions and the conflict with Iran, have posed new challenges to the inflation trajectory.
The central bank governor explained that these external shocks disrupted previous expectations, saying that without those circumstances, inflation would have been expected to decline to more moderate levels during the coming year.
Cardoso defended the Monetary Policy Committee's decision to keep interest rates unchanged at its last meeting, despite market expectations of an imminent interest rate cut, stressing that the central bank bases its decisions on economic data and not on investor expectations or market movements.
He said: “We did not lower interest rates, and believe me, we saw things that most people did not see,” referring to the bank’s assessment of the risks that still threaten price stability.
He noted that the economic reforms that the government and the central bank began implementing early on have strengthened the Nigerian economy’s ability to cope with global turmoil and have contributed to increasing its resilience to external shocks.
The Central Bank of Nigeria’s Monetary Policy Committee is scheduled to hold its next meeting on July 20 and 21, amid investors’ anticipation of any signals regarding the timing of the start of the interest rate cut cycle.
