Based on our time series analysis and survey of major markets in the Lagos Metropolis, headline inflation for the month of April is projected to increase again by 0.28% to 16.2%. This will be the 3rd consecutive monthly increase and the highest level in seven months, it was 15.99% in October 2021. All inflation sub-indices except for month-on-month inflation are expected to increase with headline inflation.
What’s on the horizon for the MPC?
The MPC is widely expected to raise interest rates at its meetings on the 23rd and 24th of May. This is likely to be the commencement of a tightening cycle and could see the CBN use open market operations mainly for liquidity management purposes as against the unorthodox approach adopted in the last few years. The committee’s decision to tighten would also come after several nations both in advanced and emerging economies have accepted a much more aggressive tightening stance.
The implications of higher interest rates on the cost of borrowing, return on savings and stock market valuations are already causing some jitters in money and capital markets.
In the download, the FDC Think Tank shares its estimates for April inflation and likely policy reactions.
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