The World Bank has expressed concerns that the monetary policy of the Central Bank of Nigeria, CBN, to rein inflation may not be effective.
The Washington-based bank expressed this in its Global Economic Prospects report released on Wednesday, stating that the tightening policy poses significant risks to Nigeria’s economic growth by failing to curb inflation.
“Risks to Nigeria’s growth outlook are substantial, including the possibility that the tightening of monetary policy stops short of reining in inflation,” the World Bank stated.
Despite the CBN’s aggressive interest rate hikes, inflation remains a significant challenge for the country.
The monetary policy rate has increased by 750 basis points since February, reaching 26.25 per cent in May.
However, the World Bank warns that this may not be enough to address the issue, predicting that Nigeria’s economic growth will remain modest, at 3.3 per cent this year and 3.5 per cent in 2025.
The non-oil economy is expected to experience sustained growth, while the oil sector is expected to stabilize as production recovers.
The World Bank noted that “If global interest rates remain high, debt-service costs for countries in the region may rise, increasing the risk of government debt distress.”
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