The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has commenced its final two-day meeting for 2024 in Abuja. As inflationary pressures continue to grip the economy, experts predict that the Monetary Policy Rate (MPR) could go up by 25 to 50 basis points (bps).
This expectation aligns with the CBN’s ongoing monetary tightening strategy, driven by persistent naira volatility and Nigeria’s rising inflation. In October 2024, inflation reached 33.88%, up from 32.70% in September. The rise in inflation is mainly caused by higher costs for food and transportation, made worse by recent policy changes and weather conditions.
Data from the National Bureau of Statistics (NBS) shows that prices have been rising steadily, reaching levels not seen since 2005. For context, the inflation rate in July 2006 was only 3%. By October 2024, inflation was close to its highest point of 34.19%, which was recorded in June.
Since 2022, the Central Bank of Nigeria (CBN) has been taking strong measures to control inflation by increasing the main interest rate by a total of 1,525 basis points. This includes a 825-basis-point increase since mid-2023, led by President Bola Tinubu, following the removal of fuel subsidies and liberalization of the foreign exchange market under President Bola Tinubu’s administration.
Razia Khan, Managing Director and Chief Economist for Africa and the Middle East at Standard Chartered Bank, predicts this interest rate will go up by 0.5% to 27.75% during the MPC meeting.
“The inflation in October, which went up to 33.9%, reflects persistent supply-side shocks rather than excessive demand.
