As the Central Bank of Nigeria’s Monetary Policy Committee meets, financial expert, Uche Uwaleke, predicts another interest rate hike.
With inflation rising and pressures mounting in the forex market, Uwaleke expects the CBN may raise the Monetary Policy Rate further, though he warns it could strain businesses already facing high funding costs.
Uche Uwaleke is a financial expert and Director of the Institute of Capital Market at Nasarawa State University.
He shared his insights with the News Agency of Nigeria (NAN) ahead of the 298th Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN), scheduled for Monday and Tuesday.
Uwaleke predicts that the MPC would likely raise interest rates again, pointing to recent economic trends.
“For the first time in many months, both core and food inflation increased last month,” he explained.
“This, along with higher inflation rates in both rural and urban areas, has widened the negative real interest rate.”
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He also highlighted ongoing pressure in the foreign exchange market, with the dollar’s forward rates remaining high.
Additionally, the Federation Account Allocation Committee (FAAC) recently shared over ₦1.4 trillion for October, a figure higher than in previous months.
With the festive season approaching, which typically sees rising prices, Uwaleke suggests the MPC may raise the Monetary Policy Rate (MPR) by 50 basis points.
However, he advises caution, recommending that the committee hold rates steady to prevent further strain on investments.
“Given the rising cost of funds for businesses, I would suggest a ‘hold’ position,” he said.
This follows a series of interest rate hikes under CBN Governor Yemi Cardoso, who has raised the MPR by 850 basis points since taking office to tackle inflation.
