In a move to ease selling pressure on the naira and help anchor inflation expectations, the Central Bank of Nigeria delivered an outsized 150bp rate hike on Tuesday, taking the Monetary Policy Rate (MPR) to 15.50 percent.
Note that the consensus expectation was for a less pronounced 50bp hike. Underpinning the notion that this was a hawkish hike was the fact that almost all of the MPC members (10 out of 12) voted in favour of the 150bp hike. While the CBN delivered an outsized 150bp rate hike and sent a clear message that it is committed to reining in inflation, it must be noted that Nigeria’s real rate remains deeply negative. This, together with mounting idiosyncratic risks and adverse external conditions, suggest the bearish bias in the naira is likely to be sustained in the months ahead. Note that Morocco also hiked interest rates yesterday.