CBN’s rate hike not enough to curb inflation

The World Bank has expressed concerns that the Central Bank of Nigeria’s monetary policy tightening may not effectively control inflation.

In its Global Economic Prospects report released on Wednesday, the institution noted that one of the significant risks to Nigeria’s economic growth is the failure of these tightening policies to rein in inflation.

“Risks to Nigeria’s growth outlook are substantial, including the possibility that the tightening of monetary policy stops short of reining in inflation,” the World Bank stated.

Despite the CBN’s aggressive interest rate hikes, inflation remains a significant challenge for the country.

The monetary policy rate has increased by 750 basis points since February, reaching 26.25 per cent in May.

However, the World Bank warns that this may not be enough to address the issue.

The report predicts that Nigeria’s economic growth will remain modest, at 3.3 per cent this year and 3.5 per cent in 2025.

The non-oil economy is expected to experience sustained growth, while the oil sector is expected to stabilize as production recovers.

The World Bank also highlights the issue of public debt in sub-Saharan Africa, which is expected to remain elevated over the forecast period.

It noted that “If global interest rates remain high, debt-service costs for countries in the region may rise, increasing the risk of government debt distress.”