Jameel Ahmad, FXTM vice-president of market research, says the fall in inflation rate recorded in Nigeria will not change the decision of the Central Bank of Nigeria (CBN) monetary policy committee to keep interest rate at 14 percent.
Commenting on the National Bureau of Statistics (NBS) inflation report released on Monday, Ahmad said the drop has shown a fall in excessive inflation pressure in Nigeria.
“The news that Nigeria’s headline inflation reading has continued to decline, is a positive step for the Nigerian economy,” he said via a mailed statement.
“Although a reading above 16% is still high, the news of a consistent decline in the inflation rate, shows that the excessive inflation pressures in recent times, have at least eased.”
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Godwin Emefiele, governor of the CBN, who annouced the decision of the committee had said in May that “the MPC was of the view that whereas the downward trend in inflation is a welcome development, the rate was still significantly above the policy reference band”.
Ahmad, who follows developments around Nigeria’s monetary authorities, went on to say that if the trend is however maintained in the coming months, MPC may cautiously review interest rate.
“While decreasing headline inflation is a welcome development for the Nigerian economy, I don’t see any imminent change in monetary policy.
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“If the trend of falling inflation continues over the coming months, we will possibly see more members of the Monetary Policy Committee (MPC) cautiously pursuing the case for an interest rate cut.”
Six of the eight members of the MPC voted for interest rates to be left unchanged, while two voted for an interest rate cut during the latest monetary policy meeting in July.
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