Written by: Lukman Otunuga, FXTM Research Analyst
It should be no
surprise that the Central Bank of
Nigeria (CBN) has left the benchmark interest rate unchanged at
14% in November. The combination of Oil price uncertainty, falling reserves, lingering
inflationary pressures, an appreciating Dollar and other external risks have
forced the CBN to maintain the status quo on monetary policy.
Although a rate
cut during the first quarter of 2019 remains a possibility, some key
prerequisites must be achieved. Inflationary pressures need to moderate further
while economic growth must display further signs of recovery.
Although the
nation remains on a quest to diversify from Oil reliance, a fair chunk of
government revenue is still realised from Oil sales. With Oil trading at
depressed levels, its impacts are likely to be felt on the economy and Naira
exchange. If the economic conditions brighten before the presidential elections
next year, the CBN still has a chance to cut rates in a bid to simulate growth.
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