This will be a big week for the Nigerian economy as investors await the Central Bank of Nigeria’s (CBN) interest rate decision on Tuesday.
With the South African Central Bank cutting interest rates last week and other major central banks across the world signaling a willingness to ease monetary policy, will the CBN join the bandwagon? An interest rate cut in Nigeria has the potential to stimulate consumption which remains a key engine for growth. However, this may also end up rekindling inflationary pressures at a time where the nation’s pace of economic growth remains fragile and exposed to oil price volatility. Whatever the CBN decides to do on Tuesday will certainly have an impact on sentiment towards the economy.
Outside of Nigeria, it will be another busy week for financial markets with all eyes on the European Central Bank policy meeting on Thursday, 25 July. With many major central banks already joining the monetary easing bandwagon, it will be interesting to see if the ECB jumps on as well. On Friday, the main event risk for the Dollar will be the US second quarter gross domestic product (GDP) data. A disappointing report should boost market expectations over the Federal Reserve cutting interest rates again beyond July.
