Cooling inflation opens doors to rate cut in the distant future   

March 19 (Lagos) - In an encouraging development, Nigeria’s inflation eased to 11.31% in February, down from the 11.37% recording in January, despite increased government spending.

While it remains too early to suggest the possibility of a rate cut anytime soon, consistent signs of cooling inflation this year should encourage the CBN to act by the final quarter of 2019. The initial argument against a CBN rate cut was the fact that the Federal Reserve was on an aggressive hiking path.

A potential rate cut by the Central Bank of Nigeria was seen to be widening the interest rate differentials between the Naira and Dollar. However, with the Fed seen leaving rates unchanged for an extended period of time and even possibly cutting rates by year-end, the CBN may be offered a window of opportunity to stimulate economic growth further by cutting rates.

reporting for on Tuesday, March 19 2019 from Lagos, Nigeria
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