CBN Governor Godwin Emefiele has given an update on when the bank is likely to lower interest rates. He disclosed this yesterday in an interview with Bloomberg.
According to him, “once inflation gets to low double digits and high single digit happens, then it should be easy for MPC to begin to look at easing. “I want to think that between the end of the first and second quarter, we should begin to see easing.”
A drop in the CBN’s Monetary Policy Rate (MPR) in theory should lead to a drop in the interest rates commercial banks charge their customers. A lowering of the interest rate is however dependent on a drop in inflation rates. The CBN tends to keep interest rate at par or slightly ahead of inflation rates.
The macroeconomic environment had improved considerably as crude oil prices have rebounded, and relative peace in the Niger Delta has led to an improvement in production volumes. Foreign reserves have hit a high of nearly $60 billion, and the improvement in foreign exchange liquidity has led to the return of foreign portfolio investors.