The Central Bank of Nigeria (CBN) kept its key interest rate at 13.00% on Tuesday, but will likely tighten monetary policy once Saturday's election is out of the way.
The weakness of the naira should gradually stoke inflation, which rose to 8.4% in Feb. Moreover, Nigeria's dependence on oil should keep the currency under pressure.
Capital Economics notes as follows ....
- We forecast that the naira will fall to 210/US$ by the end of the year, from 199/US$ at present.
- As a result, we remain of the view that the CBN will raise its key interest rate to 15.00% by mid-2015.
