"Nigeria Set to Hike Rates One Last Time to Choke Inflation Before Pause"

" Nigeria Set to Hike Rates One Last Time to Choke Inflation Before Pause \r\n The Central Bank of Nigeria is poised to raise interest rates one last time to support the naira and throttle inflation that\u2019s near a three-decade high, before ending its aggressive tightening campaign. \r\n The median estimate of six economists in a Bloomberg survey is for the 12-member monetary policy committee led by Governor Olayemi Cardoso to raise interest rates by 75 basis points to 27%. The decision will be announced on Tuesday at 2 p.m. in the capital, Abuja. \r\n \u201cDevelopments since the last meeting have definitely been hawkish; inflation has not really slowed at all,\u201d said Goldman Sachs Group Inc. economist Andrew Matheny. \u201cMost importantly, the naira has weakened once again. And that\u2019s obviously inflationary. So all of that points to the CBN staying on the hawkish side.\u201d \r\n Goldman is calling for \u201csomething much bigger, much bolder, much more decisive,\u201d if the central bank wants to arrest inflation and change the mindset of foreign investors. \u201cAnother 50 or a 100 basis points is certainly not going to move the needle in the eyes of an investor,\u201d Matheny said. \r\n Inflation quickened to 34.2% last month from 34% in May and the naira has slumped almost 6% against the dollar since mid-June, prompting the central bank to sell dollars to local foreign exchange bureaus to ease the domestic scarcity of the US currency. \r\n Analysts also urged the central bank to implement a more concrete strategy to address persistent naira weakness. This \u201cshould be articulated and demonstrated with the CBN being a more consistent and active participant in the foreign exchange market,\u201d said James Marshall, senior portfolio manager of Promeritum Investment Management LLP. \r\n Still, analysts anticipate a hike on Tuesday will bring to an end the MPC\u2019s tightening cycle that started in May 2022 and has led to rates being lifted by 14.75 percentage points. \r\n \u201cIn order to cement inflation\u2019s slowdown and hasten the restoration of positive real rates, the central bank will likely implement one final rate hike in July,\u201d said Yvonne Mhango, Bloomberg Africa economist. \r\n That\u2019s because inflation is expected to slow from July, helped by favorable comparisons with 12 months ago and measures to reduce the cost of food, including the introduction of a 180-day window to import wheat and corn duty free. \r\n They also project the naira will stabilize at its current level, aided by expected dollar inflows, easing inflationary pressures. "

"Nigeria Set to Hike Rates One Last Time to Choke Inflation Before Pause"

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