By Elisha Bala-Gbogbo and Chijioke Ohuocha
ABUJA (Reuters) – Nigeria’s central bank left its benchmark interest rate unchanged on Thursday after six hikes last year, saying that it was reassured by stability in the foreign exchange market and saw inflation gradually falling.
Economists polled by Reuters had been split on what the Central Bank of Nigeria would do, partly because of a rebasing exercise by the statistics agency which resulted in a sharply lower inflation reading in January of 24.48% year on year.
The bank’s Monetary Policy Rate remained at 27.50%, after 875 basis points of rate hikes in 2024 as the bank stepped up its fight against inflation.
Central bank Governor Olayemi Cardoso told a press conference that the Monetary Policy Committee was satisfied by recent macro-economic developments and they were expected to help price dynamics.
“Inflation is trending down, and it’s looking positive,” Cardoso told reporters in the capital Abuja, adding that the aim was to bring inflation down to single digits.
He said the central bank would analyse more rebased inflation releases to firm up its view on the inflation outlook. Among potential inflationary risks he cited food prices.
“We can see that confidence is gradually returning to our markets, which shows that we are on the right course now. Obviously, as that happens, we are in a better position to begin the process of moderating rates because stability is very, very important,” Cardoso said.
Inflation hit repeated 28-year highs last year, spurred by President Bola Tinubu’s moves to end subsidies and devalue the naira currency after he came to power in 2023.
Tinubu’s reforms were aimed at boosting economic growth and shoring up public finances, though the growth rate has remained well below a 6% target.
As well as rebasing its consumer price index, the statistics agency is also expected to release rebased gross domestic product data soon.
The last time Nigeria rebased its GDP data in 2014 it made the economy Africa’s biggest, leapfrogging South Africa, though it has recently fallen behind South Africa again because of the fall in the naira under Tinubu’s leadership.
(Reporting by Elisha Bala-Gbogbo and Chijioke Ohuocha; Additional reporting by Bhargav Acharya in Johannesburg and MacDonald Dzirutwe in Lagos; Editing by Alexander Winning and Susan Fenton)
