Analysts see MPC retain interest rate at 11.5% as inflation moderates in 1H


Policy rate: 11.5%
Inflation rate: 15.8% (December)

Nigerian food costs rose almost 20% from a year earlier, pushing up inflation
Nigeria’s central bank will likely keep its benchmark rate unchanged as policymakers give previous cuts more time to filter through the economy.

The MPC paused in November after 200 basis points of easing earlier in the year, with Governor Godwin Emefiele predicting the economy would pull out of recession in the first quarter.

Now, with inflation at a three-year high, it’s expected to look at other measures to stoke growth.

“Methods and ways to incentivize banks to direct flow of funds to the real sector of the economy will probably be topical at the meeting,” said Gbolahan Taiwo, an economist with Stanbic IBTC Bank in Lagos.

Inflation in Africa’s biggest nation, which stood at 14.2% in October, should begin to “moderate by the first half of 2021 as efforts are being made to enable significant cultivation and production of key staple items during the dry season,” Governor Godwin Emefiele said at a conference in Lagos on Friday. “We are working very hard at this.”


“A second wave of Covid-19 infections is sweeping through the continent, threatening the nascent recovery that is taking place. Policymakers may wish to extend additional support to their economies, however, rising inflation pressures have limited the space to maneuver. We therefore expect them to continue to keep rates on hold in the coming weeks in a fine balancing act between economy and inflation.” – Boingotlo Gasealahwe, Africa economist

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