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BOA: Inflation could hit 30 per cent in Nigeria.

BOA: Inflation could hit 30 per cent in Nigeria.

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BOA: Inflation could hit 30 per cent in Nigeria.

The Bank of America (BOA) has said that the Monetary Policy Committee of the Central Bank of Nigeria (CBN) may need to increase interest rates by at least 700 basis points before the end of the year to curb inflation.

In an interview with the media on Monday, the bank’s sub-Saharan Africa Economist, Tatonga Rusike, said the hike was necessary to tackle soaring inflation occasioned by the fuel subsidy removal and unification of foreign exchange.

BOA: Inflation could hit 30 per cent in Nigeria.

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Rusike explained that at the current trend, inflation may quicken to 30 per cent by the end of the year from 22.4 per cent in May, noting that the nation’s apex bank may need to push up the rates.

BOA: Inflation could hit 30 per cent in Nigeria.

He further warned that foreign investors might exercise caution before investing in the country if this decision was not taken.

“Inflation may quicken to 30% by the end of the year from 22.4% in May, and that will require a monetary policy response from the central bank – effectively, interest-rate hikes by at least 700 basis points.

BOA: Inflation could hit 30 per cent in Nigeria.

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“If the negative real interest rate is not reversing, then it is less likely to see foreign inflows coming into the country,” Rusike said, adding that “it is less likely they (CBN) will do such level of increases,” he said.

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At its last Monetary Policy Committee meeting held in May 2023, the MPC pushed the benchmark interest rate forward by 0.5 per cent to 18.50 per cent from 18.00 per cent in March.

The raise has, however, not slowed Nigeria’s soaring inflation which hit 22.41 per cent in May 2023 compared with 22.22 per cent in April 2023.

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