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Business News of Tuesday, 21 March 2023


MPC may raise lending rate, Bloomberg economists project

CBN headquaters, Abuja CBN headquaters, Abuja

As the Central Bank of Nigeria’s Monetary Policy Committee completes its two-day meeting on the economy on Tuesday, economic analysts at Bloomberg have predicted that the committee will once again raise benchmark borrowing rates.

According to Bloomberg, central banks in Africa’s biggest economies are poised to raise interest rates this month to contain sticky inflation and deter a selloff in their assets exacerbated by the collapse of US lender Silicon Valley Bank and stress at Credit Suisse Group AG.

Nigeria, South Africa, Egypt, Morocco and Kenya are some of the countries projected to raise borrowing costs in the next two weeks.

“Policymakers in Nigeria are expected to extend their longest phase of monetary tightening in more than a decade to tame inflation that’s still near an 18-year high,” a Bloomberg report said on Monday.

Economists who contributed to a Bloomberg poll expect Nigeria’s MPC to lift rates by 50 basis points, which translates to a 0.5 per cent increase. This would take the MPR from 17.5 per cent (following a rate hike in January) to 18 per cent.

Last week, the National Bureau of Statistics in its latest Commodity Price Index publication said that Nigeria’s inflation had increased from the 21.82 per cent recorded in January to 21.91 per cent in February. Given the tendency of the MPR to jack up lending rates whenever inflation goes up, economists have warned that this course of action may not be the best.