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CBN Holds Rates Steady Amid Mixed Inflation Signals
In line with expectations, the Central Bank of Nigeria voted to retain all policy parameters — keeping the Monetary Policy Rate (MPR) at 27.50% p.a. in its MPC meeting on July 22nd. This marks the third consecutive hold, as the committee weighs persistent inflationary pressures against fragile economic gains.
While headline inflation eased for the third straight month to 22.22% in June, food and core inflation rose — indicating that structural rigidities such as supply chain disruptions remain a challenge.
In the FX market, the naira has appreciated by 6.6% over the past two months to ₦1,528/$, mainly due to a weaker U.S. dollar. Its sustainability, however, depends on oil prices remaining above $65pb.
Economic Growth: Limping, Not Leaping
Nigeria’s re-based 2024 GDP now stands at $250 billion, with modest Q1 2025 growth of 3.13%, up from 2.27% in Q1’24. While economic growth is on a positive trajectory, a GDP of $250bn implies that an annual growth rate of 15% would be required to achieve the current administration’s $1 trillion GDP goal by 2030. An investment-led approach, particularly in infrastructure development such as power, petroleum refining, and roads, is crucial to meeting such an ambitious target.
Outlook: Macroeconomic Stability Fragile, Risks Still Elevated
With oil prices projected to hover between $65–$70pb and oil production rising to 1.5mbpd, inflation could dip towards 22% by August. However, high borrowing costs, food prices, and transport fares will keep the pressure on household incomes and business costs.
These insights were unpacked by Bismarck Rewane on Channels TV’s News at Ten.
Please find the slides and video link attached.
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