Policy Interest Rate in Nigeria
The Monetary Policy Rate ended 2022 at 16.50%, up from the 11.50% end-2021 value and up from the reading of 12.00% a decade earlier. For reference, the average policy rate in Sub-Saharan Africa was 11.80% at end-2022. For more interest rate information, visit our dedicated page.
Nigeria Interest Rate Chart
Nigeria Interest Rate Data
2019 | 2020 | 2021 | 2022 | 2023 | |
---|---|---|---|---|---|
Monetary Policy Rate (%, eop) | 13.50 | 11.50 | 11.50 | 16.50 | 18.75 |
Central Bank raises rates in September
Bank delivers surprise hike: At its meeting on 23–24 September, the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate (MPR)—its key policy rate—by 50 basis points to 27.25%. Moreover, it also increased the Cash Reserve Ratio for Deposit and Merchant Banks. Meanwhile, it left unchanged the Liquidity Ratio and the asymmetric corridor around the MPR at plus 500 basis points to minus 100 basis points. The move ran counter to market expectations of a hold.
High inflation and a weak currency prompt a hike: The Bank highlighted that core inflation remains elevated, which underlines the persistence of price pressures. Additionally, the CBN said that real interest rates remain negative, thus limiting much-needed inflows of foreign capital to support the ailing naira. Against this backdrop, the Bank deemed it necessary to hike interest rates again.
Muted forward guidance: The CBN did not provide any explicit forward guidance; instead it said that it would monitor domestic and global developments to “ensure that the appropriate response is always deployed to address emerging risks”. The majority of our panelists expect the Bank to hike by another 25–150 basis point at its last meeting of 2024 on 25–26 November, and to start cutting rates in H2 2025.
Panelist insight: Analysts at Fitch Solutions commented on the outlook: “We expect that the CBN will implement another 50bps hike at the final monetary policy committee (MPC) meeting of 2024 in November. Although we project inflation to continue its downward trend in the coming months, this will primarily be driven by favourable base effects as the year-on-year impact of the 2023 fuel price hike fades. Indeed, underlying price pressures will persist, as evidenced by above-trend month-on-month inflation caused by inadequate domestic food production and persistent weakness in Nigeria’s foreign exchange market.”
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Nigerian interest rate projections for the next ten years from a panel of 8 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Nigerian interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Nigerian interest rate projections.
Want to get access to the full dataset of Nigerian interest rate forecasts? Send an email to info@focus-economics.com.
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