CBN to hold interest rates amid inflation adjustments – Report

Nigeria’s central bank CBN is expected to hold interest rates steady at 27.5% on Thursday, pausing its aggressive tightening cycle following a sharp decline in inflation, driven by a revision in data calculation methods.

A Bloomberg poll of nine economists found that seven anticipate the Central Bank of Nigeria (CBN) will maintain the current rate after annual inflation in January dropped to 24.5% from 34.8% in December under the previous methodology.

“Nigeria’s rates had become sufficiently restrictive to promote confidence and stability in the naira,” said James Marshall, senior portfolio manager at ProMeritum Investment Management.

The CBN has raised interest rates by a cumulative 16 percentage points since 2022 to curb decades-high inflation and stabilise the naira, which has depreciated by 70% against the US dollar since the introduction of currency reforms in 2023.

While some analysts see room for future cuts, Bloomberg’s Africa economist Yvonne Mhango suggested that reductions may not come before 2025 third quarter of 2025.

Since Governor Olayemi Cardoso assumed office in September 2023, the central bank’s monetary tightening has yielded notable results, with the naira trading within a narrow band of 1,470 to 1,550 per dollar since early December.

However, Citigroup analyst Katie Kironde cautioned that “It’s hard to decipher what the trend of inflation is currently.”

READ ALSO:N50m damages against IGP: S’Court quashes CBN garnishee

Kironde added that the recent decline is more of a structural adjustment than a fundamental shift. This uncertainty could lead the CBN to maintain its cautious approach to sustain policy credibility.

The decision, expected later on Thursday, will be closely watched by investors and policymakers waiting for signals on Nigeria’s economic conditions.