(Bloomberg) — Nigeria’s central bank paused its steep campaign of monetary tightening, after an overhaul of the data used to calculate inflation showed it had significantly slowed.
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The monetary policy committee maintained the policy rate at 27.5%, Governor Olayemi Cardoso told reporters in Abuja, the capital on Thursday. Eight out of nine economists in a Bloomberg survey correctly predicted the decision.
“The MPC noted with satisfaction recent macro economic developments,” Cardoso said, citing recent stability of the naira. “The committee was unanimous in its decision to hold all parameters.”
The MPC has raised rates by a cumulative 16 percentage points since 2022 to cool decades-high inflation and steady the naira, which has depreciated 70% against the dollar following currency reforms in 2023.
On Track
“Confidence is gradually returning to our market which shows that we are on the right course,” he said. “We will continue with the orthodox policies that we have embarked upon.”
The naira has stabilized since early December trading at a narrow range between 1,470 and 1,550 per dollar. Following a revamp in how the data was calculated, annual inflation slowed to 24.5% in January, versus 34.8% a month earlier according to the old method.
The statistics agency overhauled the consumer price index for the first time in 16 years and changed the reference year to 2024. It also reweighted categories including food and non-alcoholic beverages and increased the number of items in the inflation basket to 934 from 740.
Cardoso welcomed the changes, but cautioned that officials were still watching prices.
“What we have is a CPI that is more reflective of the reality of consumption patterns and that’s a good thing,” he said. “Members, however, were not oblivious to the risk of persisting inflationary pressures driven largely by food prices.”
–With assistance from Simbarashe Gumbo, Ruth Olurounbi and Emele Onu.
(Updates with more Cardoso comments from the fifth paragraph.)
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