IMF Supports CBN's Rate Cut to 23% Amid Inflation Concerns

The International Monetary Fund (IMF) has endorsed the Central Bank of Nigeria's (CBN) decision to lower its benchmark interest rate to 23 percent, while cautioning against premature monetary easing that could jeopardize inflation control efforts. Zeine Ould Zeidane, Director of the IMF’s African Department, stated during a press briefing at the IMF-World Bank Annual Meetings in Thailand that Nigeria has made notable progress in reducing inflation after a period of high price pressures and elevated real interest rates.

The CBN's decision to cut the Monetary Policy Rate by 350 basis points from 26.5 percent to 23 percent was justified by improvements in inflation, although it does not indicate a shift towards a more accommodative monetary policy. The IMF stresses that monetary policy should be guided by economic data, with a focus on reducing inflation towards the central bank's target.

The CBN's rate cut follows a trend of declining inflation, with the September inflation rate reported at 14.63 percent, down from 15.39 percent in August.