- Rate increase of up to 500 bps seen at Feb. 26-27 gathering
- Cardoso expected to clarify central bank’s position on forex
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Nigeria’s central bank is expected to raise interest rates by as much as 500 basis points next month and provide clarity on foreign-exchange management that’s blamed for turning investors away.
The Central Bank of Nigeria announced a monetary policy committee meeting for Feb. 26-27. It will be Governor Olayemi Cardoso’s first since taking the helm in September and there’s a lot to talk about. Nigeria’s last MPC meeting was held in July, when the central bank raised rates by less-than-forecast 25 basis points
to 18.75% — since then inflation has surged and the naira has remained under pressure.
“We are looking for 200-300 basis points of rate hikes,” said Mohamed Abu Basha, head of macroeconomic analysis at EFG Hermes. “Inflation has been on the rise and as the first meeting for CBN under its new management, we think they need to hand over a decisive call to the market,” Basha said.
Cardoso set high expectations with a speech in November when he promised sweeping reforms including a switch to inflation targeting from trying to control money supply. But he’s been largely silent in public in the subsequent weeks — drawing criticism for a lack of communication — and only released the 2024 schedule for the central bank’s policy meetings late Friday.
Consumer prices in Africa’s most populous nation climbed an annual 28.9% in December. That’s the fastest pace in almost three decades, fueled by the abolition of fuel subsidies and a rapidly weakening currency that has lost around 50% of its value against the dollar after tight forex rules were relaxed in June.
