Experts Predict Another Increase in Interest Rates As Inflation Continues to Rise

• The CBN's Monetary Policy Committee is set to meet and make decisions on how to tackle challenges facing the naira and rising inflation
• With the continuous rise in inflation, economists predict that the CBN may raise interest rates again
• Another interest rate increase could make borrowing more expensive for businesses and consumers

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

Economic experts are forecasting another interest rate hike as the Central Bank of Nigeria (CBN) meets on Monday, November 25, and Tuesday, November 26, 2024, to find solutions to rising inflation.

The CBN has been raising interest rates to combat inflationary pressures, but the impact has yet to be felt.

The latest data from the National Bureau of Statistics announced that in October 2024, the Headline inflation rate was 33.88% relative to the September 2024 headline inflation rate of 32.70%.

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While food inflation in October 2024 was 39.16% on a year-on-year basis, 7.64% points higher than the rate recorded in October 2023 (31.52%).

Experts share opinion on interest rate expectation

Experts have shared their expectations for the upcoming MPC meeting. The CBN's benchmark interest rate currently stands at 27.25%, a rate that businesses have complained is too high for them to access loans.

Razia Khan, managing director, chief economist, Africa and Middle East Global Research, Standard Chartered Bank, said:

"We now expect the Central Bank of Nigeria to raise the monetary policy rate by another 50 bps to 27.75% at its 26 November meeting. We previously expected it to hold the policy rate steady at 27.25%.”

BusinessDaa reports that Ayodeji Ebo, managing director/CBO, Optimus by Afrinvest, also noted:

“Given the unrelenting rising inflation, I expect the CBN MPC to raise the MPR by 25-50bps to keep the interest rate attractive and reduce pressure on FX.

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"On the other hand, it will add further pressure on the companies due to the impact on financial costs.”

Kelvin Umami, an economist and policy analyst,t told Legit.ng that the current inflation trajectory leaves CBN with no choice.

He said:

"Given the current trajectory of inflation, the CBN may be compelled to increase its benchmark interest rate again.

The central bank's primary goal is to curb inflation, and with prices continuing to climb, it may resort to another rate hike in its next monetary policy meeting."

Financial expert Prof. Uche Uwaleke also expect an increase in interest rates from the CBN's MPC.

Uwaleke pointed out that inflation has continued to climb, with the rural and urban areas experiencing higher rates than before.

He noted:

"I will not be surprised if the MPC further jerks up the MPR by at least 50 basis points."

Cost of cooking a pot of Jollof rice

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Earlier, Legit.ng reported that the average cost of making a pot of jollof rice for a family of five has risen once again, and it is over N20,000 now.

This was disclosed in the latest Jollof index report published by SBM Intelligence for 3rd quarter of 2024.

Nigerians have been battling a rise in food prices, which has caused significant pressure on household finances.

Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.

Source: Legit.ng