Nigeria’s Central Bank Governor Godwin Emefiele said on Friday he expected inflation rates to fall at a faster pace and hit high single-digit rates mid-next year.
“We are very optimistic that food prices will come down, and as they come down it will help to complement the reduction in core inflation,” Emefiele told journalists on the sidelines of an investment conference at the London Stock Exchange, adding he expected a “more aggressive moderation,” Reuters reports.
“We are hoping that by the middle of next year we should begin to approach the high single digits,” he said. Around 9 percent would be a good target, he said.
Annual inflation in Nigeria slowed for an eighth month in September, easing to 15.98 percent.
Nigeria, which has Africa’s largest economy, emerged from its first recession in 25 years in the second quarter as oil revenues rose. But the slow pace of growth suggests the recovery remains fragile.
However, the central bank held interest rates at 14 percent in September to keep liquidity tight, saying it felt that loosening would worsen inflation and drive bond yields negative which could lead to capital flight and hurt the currency.
Emefiele said as the economy began to hit thresholds on inflation and other gauges, he expected the monetary policy committee would begin to look at interest rate cuts a bit more favourably and think about easing.
“I would like to see low interest rates and I would like to see low inflation and I would be happy to see it as quickly as possible. When? I cannot categorically say.”
Asked about the outlook for unifying the country’s multiple exchange rates, Emefiele said Nigeria needed to see more foreign investors coming and was analysing the situation on which further steps to take.
In April, Nigeria introduced the “Investors & Exporters FX Window,” which allows investors and traders to swap nairas for dollars at market-determined rates.
“We are beginning to get it right, and all I want to do is to continue to enforce what we are doing, and we will not want to take any action that ...will upset any gains that we have seen so far.”
The World Bank forecast Nigeria’s economy to grow by 1 percent in 2017 - 0.2 percentage points below its forecast in April.