New Telegraph

Nigeria’s Inflation May Hit 30% – Bank Of America

The Bank of America (BOA) on Tuesday hinted that the Monetary Policy Committee of the Central Bank of Nigeria (CBN) may need to increase interest rates by at least 700 basis points before the end of the year to curb inflation.

Speaking in an interview with Bloomberg, the bank’s sub-Saharan Africa Economist, Tatonga Rusike, said the increase was necessary to tackle rising inflation occasioned by the fuel subsidy removal and unification of foreign exchange.

Rusike explained that in the current situation, inflation may quicken to 30 per cent by the end of the year from 22.4 per cent in May, stating that the nation’s apex bank may need to push up the rates.

He further warned that if this decision was not taken, foreign investors might exercise caution before investing in the country.

“Inflation may quicken to 30% by the end of the year from 22.4% in May and that will require a monetary policy response from the central bank – effectively, interest-rate hikes by at least 700 basis points.

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“If the negative real interest rate is not reversing, then it is less likely to see foreign inflows coming into the country,” Rusike said adding that “it is less likely they (CBN) will do such level of increases,” he said.

At its last Monetary Policy Committee meeting held in May 2023, the MPC further pushed the benchmark interest rate forward by 0.5 per cent to 18.50 per cent from 18.00 per cent in March.

The raise has, however, not slowed Nigeria’s soaring inflation which hit 22.41 per cent in May 2023 compared with 22.22 per cent in April 2023.

In its report last month, the National Bureau of Statistics attributed the increase in the average prices of goods and services in the month under review to the 24.82 per cent jump in the food inflation rate.

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