Economic Chaos: CBN may raise Nigeria’s interest rates again, says ICM director

A financial expert, Uche Uwaleke, says the Monetary Policy Committee of the Central Bank of Nigeria is likely to raise interest rates again.

News Agency of Nigeria • November 24, 2024

OLAYEMI CARDOSO; CBN

A financial expert, Uche Uwaleke, says the Monetary Policy Committee of the Central Bank of Nigeria is likely to raise interest rates again.

Mr Uwaleke, the director of the Institute of Capital Market at the Nasarawa State University, is also the president of Capital Market Academics of Nigeria.

He said this in an interview on Sunday in Abuja, against the backdrop of the 298th MPC meeting scheduled for Monday and Tuesday.

According to him, core and food inflation increased last month for the first time in many months.

“Ditto for rural and urban, year-on-year and month-on-month inflation, further widening the negative real interest rate. The Fx market is still experiencing pressure going by the forward rates of the dollar. FAAC just shared more than N1.4 trillion for October, higher than the figures for previous months,” he said.

He said there was also the approaching festivities’ period to consider often characterised by higher prices of goods and services.

“Against this backdrop, I will not be surprised if the MPC further jerks up the MPR by at least 50 basis points,” he said.

He, however, advised the committee to retain its prevailing monetary policy rates to moderate investment costs.

“Nevertheless, all considered, including the rising cost of funds for businesses, I would advise a hold position,” Mr Uwaleke said.

The MPC raised the Monetary Policy Rate, which is the baseline interest rate, by 50 basis points to 27.25 per cent from 26.75 per cent in its 297th meeting in September.

That decision marked the fifth consecutive hike in rates since Yemi Cardoso took charge as CBN governor and chairman of the MPC.

The first decision under Mr Cardoso was an aggressive hike in the MPR by 400 basis points, from 18.75 per cent to 22.75 per cent in February. In March, the committee again increased the MPR by 200 basis points to 24 75 per cent, followed by subsequent hikes to 26.25 in May and 26.75 per cent in July.

Mr Cardoso has, thus, increased the MPR by 850 basis points since the commencement of his tenure.

According to him, the aim is to aggressively address Nigeria’s high inflation, particularly core and food inflation.

(NAN)

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