Home Uncategorized CBN maintains interest rates to curb rising inflation

CBN maintains interest rates to curb rising inflation

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The latest inflation figures from Nigeria will most likely deter the Central Bank of Nigeria (CBN) from cutting interest rates anytime.

Consumer prices in Nigeria accelerated for the fourth straight month in December, hitting its highest level since April 2018 at 11.98 per cent as food prices continued to climb amid the on-going border closure.

Commenting on the issue, Mr Lukman Otunuga, Senior Research analyst with FXTM said : “With inflationary pressures making an unwelcome return into early 2020 and moving further away from the CBN’s nine per cent upper target band, the Naira will continue to be vulnerable. Although central bank Governor, Godwin Emefiele, said in November that “the impact of the border closures on inflation is temporary,” this may be questioned if inflation continues to escalate in 2020.”

On interest rate, he said: “Rising inflationary pressures should force the CBN to maintain status quo on interest rates next week. However, all eyes will be on the loan to deposit ratio for banks which has been set to 65 per cent. With monetary easing out of the question, the central bank could increase the loan to deposit rate to 70 per cent in an effort to boost economic growth through investments in Nigeria’s real sector”.

Source: The Sun

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