IMF Supports CBN's Interest Rate Cut Amid Inflation Progress

The International Monetary Fund (IMF) has endorsed the Central Bank of Nigeria’s (CBN) decision to lower its benchmark interest rate, stating that significant progress in controlling inflation allows for policy adjustments without easing monetary conditions. The CBN reduced the Monetary Policy Rate (MPR) by 350 basis points at its September Monetary Policy Committee meeting, lowering it to 23 percent from 26.5 percent.

IMF’s African Department Director, Zeine Zeidane, clarified that this reduction should not be interpreted as a move towards an accommodative monetary policy stance. The IMF also noted an improved growth outlook for Nigeria, projecting a 4.2 percent economic growth this year, supported by higher oil prices and stronger foreign exchange receipts.

Deputy Director Montfort Mlachila highlighted that the services sector is the primary driver of this growth. However, the IMF cautioned that maintaining this growth momentum requires deeper structural reforms from the government.