Shrinking GDP, Surging Prices to Keep Nigerian Rates on Hold

21 Mar 2017   Nigeria

Faced with a contracting economy, surging inflation and a rigid exchange rate, Nigeria’s central bank will have little choice but to keep its key interest rate unchanged on Tuesday. The Monetary Policy Committee led by Governor Godwin Emefiele has held the policy rate at 14 percent since July and is unlikely to make a change, according to all 17 economists and analysts surveyed by Bloomberg. Foreign-exchange policy has become a common agenda-item for the committee as the nation maintains a managed currency float and has stopped importers of goods it deems non-essential from buying dollars on the official market. While this has contributed to a rapid increase in consumer prices, Emefiele said on March 11 that allowing the naira to freely float will hurt the economy, which shrank by 1.5 percent last year, the first contraction since 1991. “They won’t cut because inflation remains high, and they won’t hike […]

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