The World Bank has projected that Nigeria, along with Angola and Sierra Leone, will maintain high interest rates for an extended period due to double-digit inflation and weakened currencies. The bank’s latest Africa’s Pulse report highlighted these economic challenges, stating that the Central Bank of Nigeria (CBN) may even raise rates further if inflation persists.
Nigeria’s inflation rate for September accelerated to 32.70%, driven by rising fuel prices, according to the National Bureau of Statistics. In response, the CBN recently increased its benchmark interest rate by 50 basis points to 27.25%.
The World Bank noted that, unlike some African countries reducing interest rates, Nigeria and others facing significant inflationary pressures will adopt a “higher-for-longer” approach to monetary policy. The report also cited currency weakness and slow fiscal adjustments as key reasons behind this stance.
The naira remains one of the worst-performing currencies in Sub-Saharan Africa, depreciating by 43% as of August 2024 due to high demand for US dollars and limited inflows.
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