CBN raises rates further to combat inflation

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CBN raises rates further to combat inflation - The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) by 50 basis points to 26.75% to combat inflation and support the naira. The CBN also adjusted the asymmetric corridor around the MPR from +100/-300 to +500/-100, effectively raising the cost of borrowing from the central bank's Standing Lending Facility (SLF) window.  This move is aimed at discouraging banks from tapping into the SLF, as data shows banks have been accessing this facility more than the Standing Deposit Facility (SDF). The change in the asymmetric corridor will widen the spread between SLF and SDF, making it more costly for banks to borrow from the central bank. Analysts expect this hawkish stance to drive a modest increase in fixed-income yields but also believe it will help retain Nigeria's carry as one of the most attractive in Africa, attracting foreign inflows.

West Africa Gets Ready to Map Its Future: ESRI User Conference Arrives in Abuja - The ESRI User Conference lands in Abuja, Nigeria on September 10th-11th, 2024. This conference is your chance to join a ground-breaking event uniting the region's professionals, academics, and industry leaders.

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Nigeria's Rising External Reserves Poised to Boost Investor Confidence - Nigeria's external reserves reached a 17-month high of $37.05 billion in July 2024, a development expected to enhance investor confidence. The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, cited the increase in reserves as a positive factor for a more stable exchange rate. The growth in diaspora remittances, which rose to $2.34 billion in 2024 from $1.8 billion the previous year, as well as increased foreign exchange inflows and capital importation, have contributed to the reserves' expansion.  To further combat inflation and attract foreign investment, the CBN raised the Monetary Policy Rate by 50 basis points to 26.75% and adjusted the asymmetric corridor around the rate. The CBN remains committed to its price stability mandate and believes inflation will moderate in the near term, aided by monetary policy traction and measures by the fiscal authority to address food inflation. The convergence between the official and parallel market exchange rates has also been a positive outcome of the CBN's policies.

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