By Chijioke Ohuocha and Elisha Bala-Gbogbo
ABUJA (Reuters) -Nigeria’s central bank kept its monetary policy rate at 27.50% for the third consecutive time this year, pledging on Tuesday to maintain its current stance until inflation risks recede.
Consumer inflation in the oil-producing West African nation fell for the third straight month in June to 22.22% year-on-year from 22.97% in May.
Central Bank Governor Olayemi Cardoso acknowledged that inflation was easing. He said the rate-setting Monetary Policy Committee’s decision was based on the need to sustain disinflation.
“Maintaining the current monetary stance will continue to address the existing and emerging inflationary pressure,” Cardoso said, adding the goal was to get inflation to single digits.
Most economists polled by Reuters had predicted the central bank would keep the rate unchanged after hiking it six times in 2024 to fight soaring inflation, which repeatedly hit 28-year peaks last year.
Price pressures have been spurred by President Bola Tinubu’s reforms since coming to office in 2023, including ending costly subsidies and the devaluation of the naira currency.
But inflation dropped sharply in January when the statistics agency updated the base year for its calculations and re-weighted the inflation basket, falling to 24.48% in annual terms from 34.80% in December.
However, its decline has since slowed.
Cardoso said the fall in inflation in June was largely driven by the moderation in energy prices and stability in the foreign exchange market.
“Despite these positive developments, members (of the MPC) observed the uptick in month-on-month headline inflation, suggesting the persistence of underlying price pressures, the continued global uncertainties,” he said, adding that tariff wars and geopolitical tensions could sustain price pressures.
The World Bank has warned that persistently high inflation remains a challenge for Nigeria, urging it to stick to tight monetary and disciplined fiscal policies.
(Reporting by Elisha Bala-Gbogbo and Chijioke Ohuocha. Writing by Bate Felix. Editing by Alexander Winning)
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