Macroeconomic updateNigeria

21 July 2022

Nigeria’s July Monetary Policy Decision : In Pursuit of the Holy Grail

In brief

  • A wind of change is blowing in the Central Bank of Nigeria (CBN) as it is unwavering in its commitment to its price stability mandate.
  • The monetary policy committee (MPC) once again reached for its hatchet, raising its monetary policy rate (MPR) by 100bps to 14% at the July meeting in its quest to bring inflation to the heel.
  • While global central banks are taking only baby steps to tighten policy, the CBN’s policy trade-off is still high as price risks continue to dominate the inflation outlook.
  • Inflation is the chief woe that can exacerbate Nigeria’s macroeconomic strains.
  • However, one monetary glove fitting all 11 members’ hands increases the odds of reining it in more promptly.
  • But for how long will the central bank keep up with its unbending anti-inflation stance?
  • And will it be willing to sacrifice the current economic growth bright spot?
  • I do not envy the choices facing the CBN as it navigates the shoals ahead.
  • But for the sake of Nigeria’s economy, I wish them good luck. Or should I say “bonne chance”?