Fitch Projects CBN to further increase interest rates in second half of 2024

Fitch Ratings, a global credit rating firm, has predicted that the Central Bank of Nigeria (CBN) will increase interest rates even further in the second half of the year.

 This was mentioned in its most recent credit outlook report for Nigeria, which noted that as a result of recent changes to the monetary system and the oil and gas industry, the nation’s sovereign credit default outlook was upgraded from stable to positive.

 The report claims that the apex bank conducted open market operations at rates that were more in line with the MPR following the interest rate hike in the first quarter of the year.

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Furthermore, the agency projected inflation- the major target of the MPR hike by the CBN is expected to moderate to 26.3% later this year and 18.2% by next year.

It stated, “Fitch anticipates further increases in the CBN monetary policy rate in 2H24 (following the 600bp hike to 24.75% since February 2024 alongside tightening of reserve requirements) and strengthening of monetary policy transmission, after the recent resumption of open market operations at rates closely aligned to the MPR.”

“We project inflation, which rose to 33.2% yoy in March due partly to exchange rate pass-through and rising food prices, to average 26.3% in 2024 and 18.2% in 2025, still well above our projected ‘B’ median of 4.5%.”