Published On: Tue, Nov 22nd, 2016

Analysts forecast Nigeria inflation to surge

Central Bank of Nigeria, CBN

Central Bank of Nigeria, CBN

LAGOS, (CAJ News) – FINANCIAL market watchers have forecast the Central Bank of Nigeria (CBN), today, to tighten monetary policies amid the
inflation soaring to an 11-year last week.

Inflation has spiked to 18,3 percent year-on-year up from 17,9 percent from the previous month.

Rand Merchant Bank (RMB) was pessimistic, forecasting the rate to soar further and almost touch the 20 percent mark by the end of the year.

The firm projected this would push the average rate for 2016 to 15,5 percent, slightly less than the 16,4 percent it initially expected.

“The latest numbers will put even more pressure on the central bank to tighten monetary policy at its next meeting on Tuesday,” RMB stated.

The bank said this would help arrest the decline in negative real rates and entice foreign portfolio inflows to support FX liquidity.

Offshore participants are likely to be more partial to investing over longer durations if the CBN maintains a credible and transparent policy
stance, said RMB.

First Bank of Nigeria (FBN) analysed given this surge in inflation, any decision tilting towards a policy rate cut might be difficult.

“If the clampdown by the authorities on the black market proves effective, inflationary pressures could ease slightly, paving the way for cuts,” RMB
noted.

CAJ News

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