The World Bank has said that there is no end in sight to high interest rates in Nigeria.
It said the situation is the same for Angola and Sierra Leone, with double-digit inflation and weakened domestic currencies.
The World Bank stated this in its latest Africa’s Pulse report, where it focused on how the inflation outlook varied across countries on the continent.
It pointed out that the countries will maintain a high interest rate for a long period and may even increase it.
The CBN had at its last Monetary Policy Committee meeting increased benchmark interest rate by 50 basis points to 27.25 per cent in a bid to rein in inflation.
The World Bank said in the report that unlike some other African countries that are already cutting the benchmark rate or holding it, the Central Banks of Nigeria, Angola and Sierra Leone would be considering the higher-for-longer approach.
“Central banks in countries that still have double-digit inflation and weakened domestic currencies (such as Angola, Nigeria, and Sierra Leone) will keep monetary policy rates higher for longer and, in fewer cases, they may increase their policy rates—particularly in countries where inflation rates still have not peaked.
“Broadly, currency weakness, slow fiscal adjustment, and cost pressures are among the factors driving these countries to keep a tighter stance for a longer period. For instance, Ethiopia, Ghana, and Nigeria are among the worst performing in Africa this year, and their currencies continue weakening while demand for foreign exchange remains pressing,” the World Bank report said.