CBN Keeps Rates The Same


Tuesday, July 21, 2020 / 07:27 PM / by FDC / Header Image Credit: FDC Ltd


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The MPC kept interest rates and  parameters unchanged at its one-day meeting yesterday. The outcome was no surprise as the options were limited and actions predictable.


The Nigerian apex bank is grappling with how to evolve an orderly exchange rate adjustment mechanism for a currency market that is highly segmented and fast becoming a speculators paradise. It has also been able to persuade banks to increase total credit to the economy by 21.47% to N18.9trn.


The CBN was more candid about the economic recovery prospects this time. It accepts that a U-shaped recovery is more likely and that 2020 will be a negative growth year.


In the slides and clip below, Bismarck Rewane discusses the MPC outcome on Channels TV news at 10 pm segment. 

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What This Means 

  • Price of consumer basket has increased by 12.56% (Aug'19 - Jun'20)
  • In urban Nigeria, prices jumped by 13.18%
  • Food inflation jumped by 15.18%
  • Your naira has fallen in value by 24% (N472/$)
  • But the price of oil has fallen by 35.6%

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What to Expect in Q3? 

  • Oil price will remain between $40-43pb
  • Exchange rate unification process to commence
  • Relaxation of lockdown & slow recovery
  • Domestic load factors will increase to 60% in August
  • International flights to commence in October 2020
  • Orderly exchange rate adjustment will continue as dollar supply increases
  • GDP growth (Q2/Q3 estimate): -3.5%
  • Oil production to fall towards 1.4mbpd
  • Domestic airports reopen (average load factors: 40-50%)
  • Businesses will go back to approximately 40% of installed capacity by December
  • 3rd Mainland bridge closure will take a toll on productivity and growth


Watch Video

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