Low interest rates in a low-growth economy

May 25, 2020/Coronation Report

The Monetary Policy Council (MPC) of the Central Bank of Nigeria (CBN) meets this week to consider its policy rate and the overall direction of interest rates.

As we pointed out last week, the upward movement in the CBN’s foreign exchange reserves, combined with the positive direction in oil prices and the stock market, gives the MPC room for manoeuvre.

And with Q1 2020 GDP today reported as growing 1.87% y/y, we believe a pro-growth stance will be maintained; no change in the 13.50% policy rate and little (if any) pressure to raise market interest rates.

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