The Governor of the Central Bank of Nigeria, Godwin Emefiele, said he expected inflation rate in the country to drop at a faster rate to single digit by next year as food prices decline.
Emefiele who gave the keynote address at the launch of Afrinvest 2017 Banking Sector Report on the London Stock Exchange yesterday said as the economy began to hit thresholds on inflation and other gauges, he expected the monetary policy committee would begin to look at interest rate cuts a bit more favourably and think about easing.
“We are very optimistic that food prices will come down, and as they come down it will help to complement the reduction in core inflation,” Emefiele told journalists on the sidelines of Afrinvest 2017 Banking Report launch
He added that he expected a “more aggressive moderation.”
“We are hoping that by the middle of next year we should begin to approach the high single digit ,” he said.
“Around nine per cent would be a good target. I would like to see low interest rates and I would like to see low inflation and I would be happy to see it as quickly as possible. When? I cannot categorically say,” he said.
Asked about the outlook for unifying the country’s multiple exchange rates, Emefiele said Nigeria needed to see more foreign investors coming and was analysing the situation on further steps to take.
Data released by the National Bureau of Statistics in its latest publication of the Consumer Price Index, showed that Nigeria’s annual inflation rate marginally slowed for an eighth month in September, easing to 15.98 per cent.
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This was 0.03 per cent points lower than the rate recorded in August (16.01) per cent making it the eighth consecutive decline in the rate of headline year on year inflation since January 2017.
However, the food price index showed a marginal rise in inflation at 20.32 per cent in September, up from 20.25 percent in August.
Nigeria, which has Africa’s largest economy, emerged from its first recession in 25 years in the second quarter as oil revenues rose.
But the slow pace of growth suggests the recovery remains fragile.
Despite the steady decline in inflation, the central bank held interest rates at 14 per cent in September to keep liquidity tight, saying it felt that loosening would worsen inflation and drive bond yields negative which could lead to capital flight and hurt the currency.
In April, Nigeria introduced the Investors and Exporters Foreign Exchange Window, which allows investors and traders to swap naira for dollars at market-determined rates.
“We are beginning to get it right, and all I want to do is to continue to enforce what we are doing, and we will not want to take any action that will upset any gains that we have seen so far,” Emefiele stated.
The World Bank forecast Nigeria’s economy to grow by one per cent in 2017 – 0.2 percentage points below its forecast in April.