⏳ Final hours! Save up to 60% OFF InvestingProCLAIM SALE

Nigeria Holds Key Rate as Economic Growth Remains Sluggish

Published 20/09/2019, 14:45
© Reuters.  Nigeria Holds Key Rate as Economic Growth Remains Sluggish

(Bloomberg) -- Nigeria’s central bank held its benchmark rate for a third straight meeting as economic growth in the West African nation remains sluggish.

All nine members of the Monetary Policy Committee who attended the meeting voted to keep the rate at 13.5%, Governor Godwin Emefiele told reporters Friday in the capital, Abuja.

Key Insights

  • The central bank is caught between inflation that’s been above the target range for more than four years and an economy that’s still struggling to recover from a contraction in 2016. Growth in gross domestic product was lower than forecast and slowed for the second consecutive quarter in the three months through June. With limited scope to ease policy, the central bank has started forcing lenders -- through regulations and penalties -- to give out more credit in an attempt to stimulate growth.
  • Inflation eased to a 43-month low in August as food costs grew less. However, food-price growth may pick up again after President Muhammadu Buhari closed the border with Benin to halt rice smuggling and ordered the central bank to stop dollar supplies for some food imports.
  • The naira continues to be under pressure and by keeping rates on hold, the central bank would ensure portfolio investment doesn’t slump.
“Projections indicate that real GDP during the third and fourth quarter of 2019 would average 2.11% and 2.34% respectively, driven primarily by non-oil sector,” Emefiele said. “The headwinds to the growth prospects remain high -- unemployment, rising public debt and high insecurity across the country.”

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.