Emefiele Confirms Interest Rate Cut Is Likely July This Year
High interest rate has been a thorn in the flesh of Nigeria’s economy for a long time now.
But there appears to be light at the end of the tunnel as the Central Bank of Nigeria, CBN is already considering a cut.
The apex bank had held the interest rate at 14% since July 2016 in order to stem high inflation. And now that inflation is easing, the CBN said it’s Monetary Policy Committee may start cutting interest rates in the first half of the year.
Once inflation gets to low double digits “and high single digit happens, then it should be easy for the MPC to begin to look at easing,” CBN governor Godwin Emefiele said on Wednesday in an interview at his office in Abuja, Bloomberg reported on Wednesday.
West Africa’s leading investment firm, Afrinvest had predicted in its 2018 economic outlook that inflation will ease to 12% low before the end of the year.
“I want to think that between the end of the first and second quarter, we should begin to see easing,” Emefiele added, referring to the interest rate.
While inflation slowed to a 20-month low of 15.4% in December, it’s still above the CBN’s 6 to 9% target band.
The MPC didn’t meet as scheduled this week and the central bank’s key rate remained at 14%. The MPC has been trying to balance bringing down inflation and boosting an economy that stopped growing at a time in 2016.
Emefiele noted that inflation is “treading downwards, but a little bit sticky downwards”.
“We believe that the rate of moderation will improve in the coming months,” he added.
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