Policy Brief & Alerts

January 30, 2012

Rising Inflation: Will The MPC Raise The Policy Rate Or Support Economic Growth

This brief examines global and domestic developments in
Nigeria as well as the effect of slowdown in economic growth of key oil
consuming nations on the Nigerian economy.

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Publication Date:December, 2011

Volume Number:1 Issue 4

Document Size:3 pages

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) holdsits first meeting for 2012 on January 30th, taking into consideration global anddomestic developments since its last meeting in November 2011. While events inthe global economy will remain in the front burner due to the effects of projectedslowdown in economic growth of OECD countries and other key oil consumingnations on the Nigerian economy, the key domestic issue that will influence theinterest rate decision is the partial reduction in petrol subsidy by the federalgovernment. Therefore, without taking eyes off the effects of global events on thedomestic economy, the MPC will again be faced with the dilemma of either raisingthe Monetary Policy Rate (MPR) in order to prevent the economy from overheatingdue to the inflationary effects of petrol price increase, or better still maintain aneutral policy stance. In December 2011, headline and core inflation ratesmoderated from 10.5% and 11.5% to 10.3% and 10.8% respectively, while foodinflation rose from 9.6% to 11%. However, the MPC will be concerned with thetrend of core inflation since for the whole of 2011, core inflation which discountsseasonality, averaged 11.7% compared to headline and food inflation average ratesof 10.8% and 10.3%.



Nigeria Economic Update (Issue 44)

Latest Doing Business report by the World Bank ranks Nigeria as one of the top 10 economies that showed notable improvements in doing business in 2016/2017. Precisely, the report which presents quantitative indicators on business regulation compared across 190 economies and ranked Nigeria 145th - up by 24 positions from the previous report ranking, to reach its highest rank since 2013. This may not be unexpected, given that it is consequent upon various business environment reforms in 2016. Particularly, the Presidential Enabling Business Environment Council (PEBEC) set up in 2016 enacted 31 reforms to improve business(such as improving credit to small and medium-size businesses) all of were enacted into law in May 2017.

Nigeria Economic Update (Issue 13)

Recent Data on Nigerias Real GDP growth rate (Year-on-Year) declined by 0.73 percentage points, from 2.84 per cent in 2015Q3 to 2.11 percent in 2015Q4. The slowdown in economic growth was largely driven by the decline in the performance of the oil sector which was occasioned by the slump in crude oil prices and the slight drop in the volume of crude oil produced. Specifically, compared to the 1.05 percent growth recorded in 2015Q3, the oil sector witnessed a negative growth of 8.28 percent in 2015Q4.