(Bloomberg) — The Central Bank of Nigeria’s surprise interest-rate cut on concerns of a looming recession may be insufficient to boost growth in Africa’s largest economy.
Of the 10 members of the monetary policy committee who attended its meeting, six voted to lower the rate to 11.5% from 12.5%, Governor Godwin Emefiele said at a briefing in the capital, Abuja, on Tuesday. That’s the second cut this year and came even as inflation has been above target since 2015. All six economists in a Bloomberg survey expected the rate to remain unchanged.
The lockdown of major cities to curb the spread of the coronavirus pushed up food prices faster and those remain under pressure due to floods, a weaker naira and clashes between herders and farmers. President Muhammadu Buhari’s order to ban access to foreign currency for food and fertilizer imports could also stoke inflation as businesses will look to the parallel market for dollars. The government’s move to end fuel subsidies and raise electricity tariffs will add to consumers’ costs.