Easing Inflation Forecasts Prompt Nigeria to Leave Rates Steady

The MPC held rates to support the “growth recovery and further boost production and productivity, which would ultimately rein in inflation in the short- to medium-term,” Emefiele said. The bank supports pro-growth measures and favors price stability conducive to an economic recovery, he said in a statement published after the last MPC meeting in November.

The economy’s rebound from its worst contraction in almost three decades in 2020 lost momentum in the third quarter of 2021, when it expanded 4% from a year earlier, compared with 5% in the previous three months. A survey of 12 economists by Bloomberg expects the pace of growth to further decelerate to 1.4% in the final quarter.

The MPC kept its growth forecast for 2021 unchanged at 3.1% and sees the economy expanding 2.86% this year.

Inflation, which has exceeded the 9% ceiling of the central bank’s target band for almost seven years, unexpectedly quickened in December to 15.6%. While the policy committee was concerned about the rise in the inflation rate, it sees price growth moderating toward the end of the first quarter as food supply improves, Emefiele said.

Faster economic growth and ebbing inflation are key to reducing poverty in Africa’s most-populous nation, where more than 39% of Nigerians live on less than $1.90 a day.

A Bloomberg survey of 12 economists project that monetary policy makers will begin raising interest rates from the second quarter, compared with a previous expectation for it to start in the prior three months.