CBN retains interest rate at 11.5% to support economic recovery

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained its benchmark interest rate for a fourth straight meeting, prioritizing the recovery of the economy from last year’s recession over fighting inflation that’s near a four-year high.

Blueprint Newspaper had earlier predicted that, the slow down in inflation rate in April may give the doves a weapon to silence the hawks.

This Newspaper had reported last week that, the five basis points (bps) slow down in inflation last month, may force the Monetary Policy Committee (MPC) to maintain its dovish stand when it meets next (this) week.

Before the meeting, the National Bureau of Statistics (NBS) announced a surprise 5bps moderation in headline inflation to 18.12 per cent, as temperance in food inflation (-23bps to 22.72 per cent Year-on-Year (YoY)) offset a 7bps increase in core inflation to 12.74 per cent.

The monetary policy committee kept the rate at 11.5 per cent, Governor Godwin Emefiele said on Tuesday in an online briefing. The decision by the 10 members who attended the meeting was unanimous. That’s a change from March, when six favored a hold and three voted for a hike of at least 50 basis points. The median of six economists’ estimates in a Bloomberg survey was for an unchanged stance.

Inflation, which slowed marginally to 18.1 per cent in April, is driven by supply-side factors, including insecurity and poor infrastructure, Emefiele said. The MPC sees price-growth pressures easing as domestic supply grows, he said.

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