Nigeria’s inflation has been projected to rise to 30 percent by the end of this year as a result of fuel subsidy removal and unification of foreign exchange.
This is the position of the Bank of America which also said that the Monetary Policy Committee of the Central Bank may need to increase interest rates by at least 700 basis points before the end of the year to curb the inflation.
The bank’s sub-Saharan Africa Economist, Tatonga Rusike, told Bloomberg in an interview that the rates hike was necessary to tackle soaring inflation, noting that at the current trend, inflation may quicken to 30 per cent by the end of the year from 22.4 per cent in May
He further warned that if this decision was not taken, foreign investors might exercise caution before investing in the country.
“Inflation may quicken to 30% by the end of the year from 22.4% in May and that will require a monetary policy response from the central bank – effectively, interest-rate hikes by at least 700 basis points.
“If the negative real interest rate is not reversing, then it is less likely to see foreign inflows coming into the country,” Rusike said.
According to him, “it is less likely they (CBN) will do such level of increases,” he said.
