The Central Bank of Nigeria (CBN) has signalled caution over possible interest rate cuts, despite nearly a year of declining inflation, as global economic uncertainties continue to pose fresh risks to the country’s price stability.
CBN Governor, Olayemi Cardoso, said the apex bank was not in a hurry to ease monetary policy, stressing that the priority remained maintaining price stability and protecting the gains recorded in the fight against inflation.
Speaking at the BusinessDay Conference in Lagos, Cardoso said Nigeria had recorded 11 consecutive months of disinflation, a trend he attributed partly to the impact of the CBN’s tight monetary policy.
The sustained decline in inflation has raised expectations among businesses and investors that the Monetary Policy Committee (MPC) could begin cutting its benchmark interest rate. However, Cardoso said recent global developments had complicated the economic outlook and warranted a cautious approach.
He pointed to geopolitical tensions, including conflicts involving Iran, and their potential impact on global energy prices as emerging risks that could trigger renewed inflationary pressures.
The CBN governor said that, in the absence of such external shocks, inflation was expected to moderate further next year. However, he noted that the evolving global environment had made it necessary for policymakers to carefully assess the timing of any monetary policy easing.
Cardoso also defended the MPC’s decision to keep its benchmark interest rate unchanged, saying the decision was based on economic data and prevailing conditions rather than market expectations.
He said future monetary policy decisions would continue to be guided by incoming economic indicators, inflation trends, exchange rate stability and developments in the global economy.
Analysts said the CBN’s cautious stance could help sustain investor confidence, support the naira and guard against a renewed acceleration in inflation.
While businesses and consumers continue to call for lower borrowing costs to stimulate economic activity, economists have argued that preserving macroeconomic stability remains critical before the CBN embarks on a significant interest rate-cutting cycle.
The MPC is expected to continue monitoring inflation, exchange rate movements and global economic conditions as it determines the appropriate timing for any shift towards monetary policy easing.
