The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) is expected to maintain its inflation-tightening stance at its final meeting of 2024, amid growing inflationary pressures. In September, the MPC raised the Monetary Policy Rate (MPR) by 50 basis points to 27.25%, citing concerns over core inflation, fiscal deficits, and rising food prices.
While headline inflation had been declining at the time, core inflation remained high, driven by energy costs and other structural challenges. Governor Olayemi Cardoso, in a statement, acknowledged government efforts to address food supply issues and hoped the new Dangote refinery would ease transportation and food price pressures.
However, as inflation begins to climb again, analysts predict that the MPC may implement another rate hike. Afrinvest analysts pointed out the difficulties the MPC faces, citing global inflationary signals, domestic price hikes, and increasing money supply. Furthermore, the recent PMI data showed weakening business activity, with industries like food and beverage facing contraction due to high production costs and weakened purchasing power.
Analysts expect at least a 25 basis point increase to the MPR at today’s meeting, reflecting the MPC’s ongoing focus on curbing inflation and maintaining positive real interest rates to attract foreign investment. Meristem Securities projects a 50 basis point increase, with the MPC prioritizing price stability and managing fiscal pressures.
