CBN May Hike Interest Rates Amid Election Spending Pressures

The Central Bank of Nigeria (CBN) is anticipated to raise its benchmark interest rate in response to increasing liquidity pressures stemming from election spending ahead of the 2027 general elections. This warning was issued by renowned capital market economist Prof.

Uch Uwalek during a mid-year macroeconomic review webinar hosted by Arthur Steven Asset Management. Uwalek pointed out that historical data suggests a surge in liquidity during the penultimate year leading to national elections, typically forcing the central bank's hand.

He noted that inflation usually rises slightly due to pre-election spending, driven by increased money supply. Uwalek advised market participants to remain defensive and consider rebalancing their portfolios towards fixed income, which would benefit from a rate hike.

Dr. Emomotimi Agama, Director General of the Securities and Exchange Commission, emphasized ongoing regulatory efforts to boost foreign investor confidence in Nigeria's capital market.

Mr. Tund Amolegb, Managing Director of Arthur Steven Asset Management, stated that the CBN's policy decisions will significantly influence the equity market's performance for the remainder of the year.