February 6, 2025/CBN

1.  AKU PAULINE ODINKEMELU 

I vote to raise the Monetary Policy Rate (MPR) by 25 basis points to 27.50% from 27.25%, retain the asymmetric corridor around the MPR at +500/-100 basis points, retain the Cash Reserve Requirement of Deposit Money Banks at 50% and Merchant Banks at 16%, and the Liquidity Ratio at 30%. My decision was influenced by the following developments: 

Global Economic Developments 

There has not been any significant change in the global economy since the September Meeting. The global economy remains burdened by uncertainty, even as the IMF projects growth to stabilize at 3.2% in 2024 and 3.3% in 2025 and 2026. Persistent geopolitical tensions, including the Russia-Ukraine conflict and the Middle East conflict, continue to weigh heavily on global economic prospects. The Advanced economies are expected to grow by 1.9% in 2024 and moderate slightly to 1.8% in 2025, while the Emerging Markets and Developing Economies (EMDEs) are projected to achieve growth rates of 4.2% in 2024 and 2025. Sub-Saharan Africa’s growth outlook has been revised upward to 3.6% and 4.2%.

Global inflation is projected to decelerate in 2024, moving closer to the longterm targets set by central banks in the advanced economies. The IMF forecasts a decline in global inflation from 6.7% in 2023 to 5.8% in 2024 and 4.3% in 2025. This trend is attributed to falling energy prices, a slowdown in wage growth, and tight financial conditions in the advanced economies. Inflation is expected to continue its downward trajectory in 2024 in the advanced economies. This deceleration is supported by relatively high but gradually moderating interest rates as central banks move towards monetary easing. Inflation is projected to decline by 2% from 4.6% in 2023 to 2.6% in 2024, and moderate further to 2% in 2025. Inflation in the EMDEs is projected to remain elevated due to persistent challenges such as exchange rate pressures, inadequate transport infrastructure, and energy shortages, which continue to pose upside risks to inflation. Inflation is expected to ease slightly from 8.1% in 2023 to 7.9% in 2024 and further to 5.9% in 2025. In my September statement, I emphasized that these structural factors are predominantly non-monetary. However, it remains imperative for the Bank to effectively anchor inflation expectations to ensure price stability amid persistent inflationary pressures. I therefore, supported a further, albeit gradual, rate hike to achieve this objective.

Domestic Economic Development and Outlook 

The growth data for the domestic economy remains unchanged from September 2024 due to delays in data computation and publication. Year-on-year (YoY) real GDP increased by 3.19% in Q2 2024, up from 2.98% in Q1 2024, driven primarily by expansion in the oil sector. However, muted growth in the non-oil sector, subdued consumer demand, exchange rate depreciation, elevated interest rates, and rising prices continued to constrain output growth. While growth is positive, addressing the downside risks to growth is critical for stimulating and sustaining the growth trajectory.

Year-on-Year (YoY) headline inflation increased to 33.88% in October 2024, from 32.7% in September 2024. This represents a resurgence of inflationary pressures after two consecutive months of decline. Exchange rate depreciation and high energy costs may have accounted for the resurgence. This uptick in inflation influenced my decision to vote for a further but gradual hike.

Other factors that influenced my decision are as follows: 

First, is the outlook to domestic inflation, which is projected to increase gradually due to perennial flooding in some food-producing states and high cost of Premium Motor Spirit (PMS). Second, is the year-to-date (YTD) growth in broad money resulting from the depreciation in the exchange rate through 2024. Given the increase in money supply growth, credit has also continued to grow, thus keeping aggregate demand relatively strong and putting upward pressure on inflation. As an inflation focused central bank, further tightening of monetary policy is essential to curtail credit growth and moderate aggregate demand.

2. Aloysius Uche Ordu 

Developments in the Global Economy

The November 2024 MPC took place against the backdrop of the re-election of Donald Trump as US President – an outcome that is already impacting the global economy. A month earlier, during the annual meetings of the IMF and the World Bank, policymakers in the US and other advanced economies held the view that the battle against inflation was largely won. The IMF thus raised its forecast for US economic growth to 2.8% in 2024 and 2.2% in 2025. In the euro area, the IMF projected growth below 1.0% in 2024, while Japan will barely grow at all. Overall, the global economy was expected to expand by 3.2% in 2024 which is below the 20-year average of 3.8%. The Fund also projected that global inflation would fall to 3.5% by the end of 2025, quite a drop from the peak of 9.4% in the fall of 2022.

This generally upbeat outlook will need to be revisited as Trump’s economic agenda (deficit-financed corporate tax cuts, global tariff increases, and mass deportations) is likely to be inflationary. These policies would most certainly lead to a more restrictive Fed stance in the future.

On November 7, the Fed cut interest rates by 0.25% to a target range of 4.5% to 4.75%; this followed the 50 basis points cut earlier in September, the first reduction since 2020. However, in sharp contrast to the September meeting where the Fed stated that “the direction of travel is clear”, the absence of forward guidance was particularly noteworthy in the post-November meeting statement by the Fed chair a reflection of the uncertain outlook in the period ahead. With Trump’s re-election, the pace of interest rate cuts may be reduced, with rates likely to stay higher for longer in 2025. 

Already, bond prices have fallen and the yields on US Treasury notes have risen on the expectation of larger fiscal deficits. That the dollar strengthens in anticipation of a worsening fiscal position reflects the US’s dominant position in the global economy. 

Though the uncertainty relating to the US election is now over, the policy uncertainty has only just begun with increased focus on tariffs, trade wars, taxes and trillion-dollar deficits. Executing such protectionist US policies will be far much more devastating for the rest of the world. As US interest rates rise relative to those in the rest of the world, an appreciating dollar will weaken global economic outlook and lead to reductions in overall trade volumes. 

For countries with dollar-denominated debt, a rising dollar will further aggravate their debt burdens. The combination of higher rates and stronger dollar will amount to a global tightening in financial conditions that may prompt other central banks into more rate cuts that further strengthens the dollar. Already, the euro has depreciated, and some market participants anticipate euro-dollar parity later in 2025. The ECB is thus likely to cut interest rates much faster than the Fed, especially as the Eurozone economic conditions are weaker than the US. For China, a Trump tariff will lead to substantial depreciation of the yuan, and this will drag down other emerging markets currencies. Commodities have a long history of trading inversely with the dollar which will adversely impact commodity producers, especially those in Africa.

Developments in Africa

According to the IMF’s Regional Economic Outlook, economic growth in subSaharan Africa has continued to diverge with incomes in resource-intensive countries, such as Angola and Nigeria, stagnating in contrast to non-resource rich countries such as Ethiopia and Senegal. The performance gap emphasizes the need for more effective fiscal management, improvements in the business environment, economic diversification, and adopting accountable measures to manage natural resource revenues well. As indicated above, the unfolding developments in the global economy suggest a likely worsening in the terms of trade and poor growth prospects for commodity producers. 

For South Africa, the IMF forecasts economic growth of 1.1% in 2024 and 1.8% next year. This is lower than the 3.0% growth target of the Government of National Unity. However, with a confluence of positive factors (inflation slowed to 2.8% in October which is below target; and improved investor confidence), the Reserve Bank cut interest rate by 25 basis points to 7.75% in November 2024. 

For Nigeria, CBN Staff statistical brief show that volatile items such as food and energy continued to drive price pressures in October 2024. Food inflation increased to 39.16%; core inflation to 28.37%; and headline inflation to 33.88% during the month. Disaggregated by States, 20 States recorded increased food inflation versus 17 States where food prices declined during the period. Supply chain issues, poor infrastructure and insecurity continued to play key roles in exacerbating inflationary pressures and these factors necessitate expeditious actions by the fiscal authorities.

Staff analysis of the FAAC distribution for October 2024 also highlighted other areas that merit the attention of the fiscal authorities. At N10.93trn, the Federal deficit is 80% above the projection for the period January to August 2024. There is a shortfall (60.22%) in FAAC and independent revenue receipts. The expenditure side of the ledger shows over-spending on recurrent items and underspending on capital expenditures (51.17%). Debt service payments (foreign) was 176% over budget, with debt-to-GDP ratio of 56%, which exceeds the 40% threshold of the Debt Management Office. The fiscal position and debt dynamics indicated clearly warrant serious attention, including the evident need for greater efficiency in the use of borrowed funds. This will further strengthen Nigeria’s ability to conduct fiscal policy which deteriorated slowly over the years. 

For instance, urgent measures are needed to expeditiously execute development projects and programs at the Federal, State and Local Government levels. This entails a comprehensive review of the nation’s huge portfolio of development projects whether these projects are financed by borrowed funds from the multilateral and bilateral lenders or from internally-generated resources. Some of these projects have suffered inordinate delays from previous Administrations with huge undisbursed loan balances outstanding. Such delays are clearly expensive as they unduly delay development benefits to Nigerians. In view of the constrained fiscal space, now is the time to re-evaluate the existing stock of projects to determine whether their development objectives are still relevant. Where necessary, undisbursed loan balances of poorly performing projects should be cancelled or reallocated to alternative uses. 

On the external sector and monetary policy, CBN staff presentations show noteworthy green shoots since the era of tight money began. First, there has been a marked improvement in the current account balance. Q3 2024 data shows a surplus of US$6.29bn vis-à-vis US$5.14bn in Q2 2024; and the overall balance of payment position recorded a surplus of US$3.79bn. Second, the external reserves stood at US$40.88bn at end-October 2024, a remarkable 16.9 months of import cover. The exchange rate remained relatively stable for most of the second half of 2024, reflecting increased capital inflows on account of attractive yields. 

Third, tight monetary policy has slowed the rate of credit growth with broad money supply (M3) down by around N1.7trn in October 2024 from the preceding month. Credit to the private sector declined by N1.9trn during the same period, indicating a slowing down in aggregate demand which will further ease inflationary pressure. The banking sector expects credit demand to continue to wane in the high-interest rate environment. This shock therapy is necessary to correct years of policy missteps and to control inflation. 

A most welcome development during the MPC meeting was the announced reduction in the PMS price by the Dangote refinery. This will moderate the rise in energy prices as well as transportation and food costs. And the stabilizing naira will also moderate the pass-through effect of the exchange rate which will dampen price pressures. 

Rationale for my vote. It is not enough for the CBN to be willing to do whatever it takes to fight inflation. It is vital that the Nigerian public also believes that the CBN will indeed follow through. Expectations matter as the CBN’s actions affect every aspect of economic life – albeit with long, variable lags. 

Taking account of the available data, our expectation is that inflation will moderate by the end of the first quarter of 2025. Reducing inflation requires consistent long-term actions. Now is thus not the appropriate time to ease off on the inflation pedal. I therefore voted for a 25 basis points increase in the MPR from 27.25% to 27.50%; and a hold on the CRR, the asymmetric corridor and the liquidity ratio.

3. Bala Moh’D Bello MoN

Opening Statement 

The last Monetary Policy Committee meeting in 2024 was held in an atmosphere of optimism despite the presence of lingering economic challenges. This positive sentiment was largely due to the cumulative impact of earlier increases in the Monetary Policy Rate (MPR) and several complementary fiscal policy measures that have begun to show favourable outcomes. 

Notably, we observed moderation in inflation persistence, indicating that previous strategies to manage price developments are gradually having positive effects. Additionally, the external reserves position has improved, providing a buffer against potential economic shocks and enhancing overall financial stability. Also, the trajectory of output growth remains on an upward trend, indicating that the economy is gaining momentum. I also considered recent global developments that could influence our economic situation, including shifts in the trend of international trade and global markets. This comprehensive analysis ultimately guided my decision at the meeting, reinforcing my confidence in the direction of the Committee’s monetary policy.

Key Considerations 

On the global front, the International Monetary Fund has projected output growth at 3.2% for 2024 and 2025 from 3.3% in 2023. Risks to this outlook, however, include ongoing geopolitical tensions, such as the lingering war between Russia and Ukraine, as well as the crisis in the Middle East. There is also heightened uncertainty following the outcome of the November 2024 United States elections, with fears of potential disruptions to global trade and the current economic momentum. As a result, stakeholders are urged to closely monitor these developments, as they will play a critical role in shaping the economic landscape in the years to come. 

Notwithstanding, Nigeria’s Real Gross Domestic Product (GDP) has maintained a positive trajectory, with a growth rate of 3.46% in the third quarter of 2024, compared with 3.19% and 2.54% in the preceding and corresponding periods, respectively. This growth, driven by both the oil and non-oil sectors, with a notable contribution from the Services sector, is a testament to the resilience of our economy. The non-oil sector grew by 3.37% in the third quarter, compared with 2.80% in the second quarter, while the oil sector grew by 5.17% (year-on-year), compared with 10.15% in the preceding quarter. The positive growth momentum, shown by leading indicators and staff forecasts, is expected to persist, providing a sense of stability and progress. 

Notably, the external reserves position has grown remarkably to US$40.88bn as of 21st November 2024 from US$40.06bn at end-October 2024, a development that strengthens the needed buffer to mitigate unforeseen risks and reinforces the importance of ongoing efforts at sustaining improved foreign exchange supply. The rising reserves position, alongside the relatively stable exchange rate, would enhance Nigeria’s position as an attractive investment destination. 

The resilience of the domestic economy, bolstered by a strong financial system with robust soundness indicators, instils confidence in the economic structure. Major prudential ratios, such as capital adequacy, liquidity, and Non-Performing Loans ratios, were within prudential limits, reflecting proactive regulatory oversight and strong industry risk management practices. 

Significant credit was extended to growth-enhancing sectors such as agriculture, manufacturing and general commerce, as well as individuals and households. This credit played a crucial role in stimulating economic activities and supporting output performance, emphasizing the role of financial institutions in the economy.

In addition, the results of stress tests showed that bank’s solvency and liquidity ratios remained resilient in scenarios of potential severe macroeconomic shocks. Continued vigilance is, however, required to ensure that the banking system remains strong and stable amid lingering risks. Each one of us has a role to play in this, and our collective vigilance is crucial for the stability of our financial system. 

Although inflation persistence has moderated, headline inflation, rose (yearon-year) to 33.88% in October 2024 from 32.7% in September 2024. On a month-on-month basis, it also rose to 2.64% in October 2024, from 2.52% in the previous month, with both the food and core components contributing to the continued rise in headline inflation. Food inflation rose further to 39.16% in October 2024, from 37.77% in September, while core inflation also rose to 28.37% in October 2024, from 27.43% in September. 

Recent data indicates a notable moderation in the prices of farm produce, underscoring the federal government’s proactive measures aimed at boosting productivity within the agricultural sector. These efforts include initiatives designed to mitigate insecurity in regions critical to food production across the country. Despite these positive developments, risks associated with domestic price fluctuations persist, including climate conditions and increased market demand. As a result, while the current situation shows promise, vigilance and sustained collective efforts at mitigating the risks will be necessary to navigate the challenges ahead.

Policy Decision 

While I note the broadly positive domestic trajectory, the uncertain short-term outlook for domestic prices and emerging global headwinds, calls for immediate and coordinated policy support. It is crucial that we strengthen our policies to sustain Nigeria’s economic resilience in the face of these challenges. 

The monetary authority must therefore continuously anchor the expectations of economic agents, given the risks to domestic price movements, and reinforce its commitment to keep inflation in check. The monetary policy response should, however, take cognizance of the need to support output performance, which is important for the sustained resilience of the domestic economy. 

Over the course of the year, I have voted to tighten the stance of monetary policy to rein in inflation. At this meeting, I found compelling reasons to tighten the stance further, albeit at a slower pace. Therefore, I voted to 

1. Raise the MPR by 25 basis points to 27.5% from 27.25%. 
2. Retain the asymmetric corridor around the MPR at +500/-100 basis points.
3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50% and Merchant Banks at 16%.
4. Retain the Liquidity Ratio at 30%

4. Bandele A.G. Amoo

Having reviewed the empirical developments in both the domestic and international economies since the MPC meeting, I hereby vote as follows. 

1. Raise the Monetary Policy Rate (MPR) by 25 basis points from 27.25% to 27.50%. 
2. Retain the asymmetric corridor around the MPR at +500/-100 basis points. 
3. Retain the Cash Reserve Ratio (CRR) at 50% for Deposit Money Banks (DMBs) and 16% for Merchant Banks.  
4. Retain the Liquidity Ratio (LR) at 30%.

My decision is influenced by the following developments. 

Assessment of Global Growth and Inflation

The resilience witnessed in the recent past in global economic outlook continued in November 2024. The steady but slow output expansion continued despite escalating geopolitical tensions which heightened global financial market uncertainty. Global average inflation is falling, giving rise to precipitating monetary policy convergence among advanced economies. The global PMI expanded to 52.3 index points in October 2024, from 51.9 index points in September 2024. The global headline inflation is projected to decrease further from an average of 6.7% in 2023 to 5.8% in 2024 and 4.3% in 2025. The downside risks have, however, persisted as escalating geopolitical tensions continue to further disrupt commodity prices, and increase fragmentation of trade networks. 

The current trend of lower policy rates in advanced countries, especially the United States, is expected to persist, despite the ongoing policy vigilance owing to the dynamics of geopolitical tensions. These developments require prudence when designing an optimal policy response to mitigate the impact of global spillovers such as those from attraction of capital inflows and improving exchange rate stability to improve country economic fundamentals. 

Global trade is projected to further rebound gradually in the last quarter of 2024 and 2025 driven by declining inflation and a fast-recovering Europe, Asia and US economies. Consequently, it is expected to rise to 3.1% in 2024 and 3.4% in 2025, indicating significant shifts in trade patterns, amidst identified challenges. Global debt continued to surge, driven largely by increased borrowing by India, China and Mexico.

Domestic Economic Developments and Outlook 

Domestic economic activities continued to be resilient in November 2024 when compared with October 2024 (Pre-MPC). Data from the NBS showed that economic growth in Nigeria recorded modest increase as at third quarter of 2024. The economy grew by 3.46% YoY (vs. 3.19% YoY in Q2:2024). Growth in the quarter was spurred by expansion in both the oil (+5.17% YoY vs. 10.15% YoY in Q2:2024) and non-oil (+3.37% YoY vs. 2.80% YoY in Q2:2024) sectors. The services sector led the growth of the nonoil sector contribution while the manufacturing and industries sectors posted negative contributions. For 2024 full year data, we still expect the services sector to continue to propel further growth, especially the financial and ICT sectors. 

Financial system resilience remains solid. Banking industry resilience in terms of capital and liquidity was also confirmed by the latest stress tests. Furthermore, the health parameters of banks and other depository corporations continued to be strong. The Capital Adequacy Ratio (CAR) also remained stable at 14% while the NPLs and Liquidity ratio slightly fell to 4.6 and 56.2 percent respectively when compared to their levels the previous month. The financial soundness indicators stood well to absorb risk and support credit growth effectively. Meanwhile, non-performing loans (NPL), as a proxy of credit risk, were also low (4.8%) in October 2024. However, credit growth was reportedly constrained by the current level of CRR set at 50%. It is believed that the CBN will continue to strengthen synergy with other regulators to sustain financial system stability.

Nigeria’s Balance of Payments (BOP) position remained stable to support our external sector stability. The BOP provisionally recorded a surplus in the 3rd Quarter of 2024 driven by positive balances in the current account and net asset acquisition positions. The overall account positively stood at US$3.79bn as at Q3 of 2024. Meanwhile, portfolio inflows remain high, recording a net inflow US$0.59bn as at November 2024. The total foreign exchange flows through the economy stood at US$6,175bn in September 2024 compared with US$2,570.6bn in August 2024. Furthermore, foreign reserves at the end of October 2024 stood at US$39.68bn, equivalent to several months of import cover. External reserves is projected to further increase by year end due to expected reduction in import demand pressures arising from the full deregulation of the downstream oil sector, reduced petroleum products importation regime, increased inflows and other process management by the CBN. 

Data from the National Bureau of Statistics (NBS) reported that the headline inflation rate for October 2024 was 33.88% from 33.20% in September 2024 and 27.33% in September 2023. Food inflation stood at 39.16% in October 2024 compared to 31.52% in September 2023 and 36.22% in September 2024. Core inflation moved from 26.23% in September 2024 to 28.37% in October 2024. A further breakdown of the inflation data shows that Food and Non-Alcoholic beverages were the major drivers of both year-on-year and month-on-month Headline inflation, contributing 16.65 and 1.15% respectively. Opinion survey from the states showed that insecurity, production cost, subsidy issues, exchange rate depreciation are the main factors driving inflation in Nigeria. 

Improved agricultural activity in recent months, occasioned by decline in banditry/insecurity, improved supply of farm inputs, brighten the prospects of expanded agricultural output. To further assure improved outcome on these concerns, the Federal Government continued the implementation of “Order 2024” measures. There was more deployment of CNG buses/vehicles to the states and suspension of Value Added Tax (VAT) on petroleum products remained into the year end. Given the expected stability in petroleum products pricing template of the functional domestic Refinery in the next few months, we expect the inflation trend to reduce over a short span of time into the last quarter of 2024. Restocking of the Government Strategic Grains Reserves is reported to be on-going. 

While we heartily welcome these measures which will rapidly improve real sector production and price outcomes over the short-term horizon, it is crucial to implement them with a defined exit strategy to avoid reversing gains in domestic food and aggregate goods production/output. 

Nevertheless, we shall continue to stress the urgency of addressing inflationary pressure, which has continued to undermine price stability. While monetary policy has moderated aggregate demand, production bottlenecks, rising food and energy costs continue to drive price increases. High transportation costs for farm produce and insecurity in food-producing areas also continue to play key roles. The MPC must remain vigilant to prevent spillovers or second round effects from persistent food inflation and preserve the gains made so far in monetary policy credibility. 

My Concern 

The developments since the last MPC meeting indicate further uncertainty in realising a durable disinflation trajectory towards the desired target. The short-term upsides to inflation from food prices signals the potent effect of macroeconomic shocks which may inhibit the moderation of headline inflation in Nigeria. The agricultural crop outlook is turning out to be uncertain, with improving prospects of declining output. Our inflation is not likely to be contained on continuing transmission of past monetary policy actions unless there are surprises in fiscal interventions and other sector developments such as sudden petroleum price hikes witnessed in Nigeria during September/October 2024. Issues like this may attract additional measures from the MPC in future. I am hereby committed to the MPC team vision to ensure durable alignment of inflation with desired target while supporting growth in macro terms. 

Going forward, the CBN should continue to optimize the full array of monetary instruments available which includes strengthening its pro-market monetary operations strategy to boost policy effectiveness in terms of attracting foreign capital inflows and supporting efforts to strengthen the naira. Mobilisation of household financial savings through innovative products and services offering may help to reduce excess liquidity and help to shift credit to the productive sectors. Furthermore, the Bank will need to remain vigilant and take some measures on the orderly operations of digital lending ecosystem in Nigeria; deepen the speed and efficiency of digital payments; reposition the existing special purpose vehicles to give massive support to agricultural production and processing. 

Consequently, I believe that it is early to end the tightening cycle when the enduring path to moderation in inflation rate and true exchange rate, is yet to crystalise. A little tightening (25bps increase in MPR) is beneficial now, as it allows previous hikes to further permeate the economy, aiming to rein in rising inflation. The other rates – CRR, LR, and the asymmetric corridor may remain unchanged. However, I am aware that the further hike in the MPR may negatively affect real sector players, particularly regarding corporate interest expenses on bank borrowings. The massive rebate on taxes, duties, levies granted to small and medium businesses by the Order 2024, as well as roll-out of CNG vehicles should continue to confer extensive financial relief to the product pricing process for the affected sectors. When these happen, inflation will be subdued in the interim and may further abate when other long run measures set in.

Conclusion 

The Nigerian economy presents a near-term picture of stability and strength. The positive nexus between inflation and growth is well discussed in economic literature. The country’s growth stories showed that we still have a distance to cover. Almost every sector is on the path to desire state of development. Fiscal consolidation is on-going, the financial sector remains sound and resilient under proposed recapitalisation, the real sector has been re-positioned and recovering and the social sector abounds with social safety and poverty reduction policies and programmes. Institutions are being strengthened to promote improved security and infrastructure. The external sector demonstrates the strength of any economy and Nigeria’s own is scaling to new peaks. Reforms in many sectors are underway. Global investor optimism in Nigeria’s growth prospects is at its highest ever, so we should not be complacent now, amidst rapidly evolving global conditions. We must bring inflation to our desired level in Nigeria, despite the prevailing macroeconomic conditions and outlook.

5. Emem Usoro

Global economic activities have continued to grow at a steady but modest pace, supported by optimism in the services sector, particularly financial services, despite escalating geopolitical tensions. The outcome of the recent US election in which Donald Trump emerged as the 47th President of the United States has generated a positive response in financial markets, characterized by surging equity markets, rising stock futures, improved treasury yields, and a strengthening U.S. dollar. The cryptocurrency market also rallied, driven by the “Trump trade,” reflecting investor confidence in the new administration’s economic agenda and its potential to stimulate growth and profitability. However, risks to the global outlook persist. Uncertainty surrounding the new administration’s stance on the war in Ukraine, conflicts in the Middle East, and U.S. trade policies, pose significant challenges to regional and global growth. 

Price pressures have emerged globally, signalling an end to recent disinflationary trends. These pressures are driven by demand-side dynamics, rising food and energy costs, and exchange rate pass-through to domestic prices. While major central banks, including the U.S. Federal Reserve, have stayed on course with their easing cycles to support growth, the balance of risks remains tilted towards geopolitical instability and climate-related economic shocks. 

On the domestic front, inflationary concerns have intensified since the last Monetary Policy Committee (MPC) meeting, with headline inflation rising for the second consecutive month. This increase reflects higher food costs, lingering inflation expectations, and the cascading effect of adjustments to prices of premium motor spirit (PMS) across the Consumer Price Index (CPI) basket. Core inflation has also edged upwards, driven by supply-side constraints, structural issues, and exchange rate pass-through to domestic prices. Inferences from this development signals that recent price dynamics is more supply-driven than demand-driven.

Inflation readings in October were contemporaneous with contractions in economic activities, evidenced by a decline in the Purchasing Managers’ Index (PMI) after two months of expansion. The contraction was primarily driven by persistent weaknesses in the industrial sector, alongside slow growth in the agriculture and services sectors. 

Unpacking other salient drivers of recent price pressures is vital, particularly the expansion of broad money supply, which has surpassed its indicative growth target since the beginning of the year, thus presenting inflationary risks. However, recent monetary policy tightening measures have successfully curtailed deceleration in base money growth, reducing banking system liquidity and stabilizing the money multiplier. 

Other significant pressures on price stability include widening fiscal deficits stemming from constrained government revenue, exchange rate volatility, pessimistic inflation expectations fuelled by seasonal factors, and disruptions to supply chains associated with climate change. Despite these challenges, the financial system has remained resilient, supported by a tight monetary policy stance. 

The outlook for growth in the domestic economy remains cautiously optimistic, with near-term growth expected to improve, supported by increased crude oil production and fiscal measures aimed at boosting the agriculture and services sectors. However, inflationary pressures are likely to remain elevated, driven by the pass-through effects of PMS price adjustments, exchange rate volatility, and supply-side constraints exacerbated by climatic factors. 

The external sector outlook is bolstered by favourable crude oil prices, increased domestic production, and the anticipated value-chain expansion from the operationalization of the Dangote and Port Harcourt refineries. Furthermore, the tight monetary policy stance is expected to attract capital flows, thereby supporting accretion to external reserves, exchange rate stability and expansion of the fiscal space. 

Nonetheless, downside risks to the outlook remain significant. Escalating geopolitical tensions could adversely affect global growth, reducing Nigeria’s export earnings, exacerbating fiscal deficits, and dampening domestic economic activity. Persisting inflationary pressures, negative inflation expectations, and year-end seasonal demand could also strain the domestic economy further.

In the face of these challenges, a balanced and data-driven approach to monetary policy remains critical. Anchoring inflation expectations and safeguarding the disinflationary gains achieved so far are essential to ensuring price stability. While acknowledging the impact of recent monetary tightening on borrowing costs, it is imperative to weigh the long-term benefits of price stability and sustainable economic growth against short-term challenges. The commitment to fostering macroeconomic stability will guide the policy direction moving forward.

2.0    My Decision

On the basis of the various global and domestic developments outlined above, the outlook for inflation remains broadly uncertain; a steadfast commitment to ensuring long-term stability is, however, essential to effectively navigate these challenges. Consequently, I voted to: 

1. Raise the MPR by 25 basis points to 27.50% from 27.25%, to further tighten financial conditions, reduce the negative policy rate gap and attract more capital inflows to stabilize the naira exchange rate; 
2. Retain the asymmetric corridor at MPR +500/-100 basis points; 
3. Retain the CRR at 50% for commercial banks and 16% for merchant banks to enhance monetary control; and 
4. Retain the LR at 30.0%.

6.   Lydia Shehu Jafiya

Global economic growth has remained relatively stable but showing uneven progress across economies. While some Advanced Economies are witnessing economic expansion, some in the Emerging Markets and Developing Economies (EMDEs) are experiencing a decelerating trend. The International Monetary Fund (World Economic Outlook, October 2024) forecasts global growth at 3.2% apiece in 2024 and 2025, from 3.3% in 2023. Similarly, growth in the Advanced Economies and EMDEs are projected to remain stable at 1.8% and 4.2% in 2024 and 2025, respectively, reflecting the challenges posed by the destabilizing effects of geopolitical crisis, tight financial conditions, and the uncertainties around major Advanced Economies. 

With global inflation continuing to moderate, the International Monetary Fund in the World Economic Outlook of October 2024 has forecast inflation in 2024 and 2025 to moderate to 5.8% and 4.3%, respectively, from 6.7% in 2023. Inflation in the Advanced Economies has fallen almost to pre-pandemic levels and is expected to sustain its deceleration for the rest of 2024. This is largely due to the continued progress in disinflation, buoyed by a well-calibrated monetary policy tightening cycle over several months. As such, inflation is projected to decelerate to their long run objectives in 2025, falling from 2.6% in 2024 to 2% in 2025. In the EMDEs, inflation is projected to moderate to 7.9% in 2024, and further slow to 5.9% in 2025, due to expected decline in food and energy prices. 

Global trade is projected to grow by 3.1% and 3.4% in 2024 and 2025, respectively, but confronted with major risks such as the escalation of the Middle East crisis which may likely spillover to the global supply chain.

The Domestic Economy 

Domestic economic growth continued its upward trend, with real GDP (year-on-year) growing by 3.46% compared to 3.19% and 2.54% in Q2 2024 and Q3 2023, respectively. The non-oil sector grew by 3.37% in Q3 2024, higher by 0.62% compared to 2.75% in the corresponding quarter of 2023, and by 0.57% over 2.8% in the second quarter of 2024. Growth in the non-oil sector was driven by the Services sector which contributed 53.58 per cent to real GDP. 

Headline inflation remained elevated at 33.88 per cent in October 2024, increasing by 1.18% from 32.7% in September 2024. On a month-on-month (MoM) basis, headline inflation rose by 0.12% points above the September 2024 figure of 2.52 per cent. Food and energy prices remained the main drivers of headline inflation evidenced by the upward movement in the food and core components of the index compared with the previous and corresponding months. 

Monetary and Financial Sector Developments revealed an increase in Broad Money Supply above its 2024 provisional benchmark, indicating an increase in total liquidity. 

Developments in the external sector points to a stronger external position, despite persisting tight financial conditions and adverse impact on trade of the various ongoing geopolitical crisis. In Q2 2024, the overall balance of payments recorded a surplus, supported by the current account which recorded a higher surplus due to an increased surplus in the goods account, largely driven by a decline in import bills. 

The external reserves stood at US$40.88 billion on 21st November 2024, up from US$40.06 billion at end-October 2024. At this level, the external reserves position can finance 17 months of imports. In the foreign exchange market, the average naira exchange rate remained stable, albeit high, since June 2024, an indication of strong market recovery, following deliberate policies by the monetary and fiscal authorities to stabilize the market. 

Despite current macro-economic challenges, the Financial Soundness Indicators (FSIs) of the banking industry were within their macroprudential limits, a demonstration of firm regulatory oversight by the supervisory authority. 

Consideration For Voting 

The November 2024 Monetary Policy Committee (MPC) meeting held against the backdrop of continued inflationary and exchange rate pressures, with stronger growth momentum. Since its first meeting this year, the Committee maintained a restrictive monetary policy stance to address the undesirable consequences of rising inflation on cost of living and welfare of citizens. Evidently, the tight monetary policy stance has continued to prove effective in anchoring inflation expectations evidenced by the slowing trend in the upward movement of the index, the stability in the foreign exchange market and stable growth outcomes. 

Whilst growth can be said to have improved, indicators of economic activity the Purchasing Managers Index (PMI) for October 2024, pointed to a moderately decelerating trend, driven largely by contraction in Industry PMI, indicating a contraction in economic activities in that month.

Staying focused on the Bank’s mandate of attaining price stability conducive to inclusive growth, I am of the view that current persistence of inflation is the result of a combination of structural and monetary factors. Therefore, a blend of fiscal and monetary policy tools are required to address observed supply side inefficiencies and close the output gap, as well as moderate excess demand by draining surplus liquidity. 

It is noteworthy that economic growth has remained resilient despite the contractionary stance of monetary policy, aided by macro-fiscal measures to improve investment in infrastructure, contain insecurity, and address adverse climatic conditions particularly in the food producing belts of the country. These, combined with strategic partnerships with the private sector, particularly in the downstream oil and gas sector, are expected to boost food and energy supplies and lead to a reduction in their prices in the near to medium term. 

While it seems obvious that a tight policy stance would remain appropriate at this meeting to address rising inflation, I feel concerned about the implications on the cost of credit to the private sector, investment and production, as well as on the fiscal operations of government. 

Furthermore, I believe that the tightening measures of the previous months are yet to fully run their full course, considering that monetary policy transmission comes with a medium-term lag. Confronted with the optimal policy choice to address the rising spectre of inflation and effectively anchor inflation expectations, I reckoned that inflation and growth objectives are mutually inclusive, and given that inflation is the major challenge at hand, while noting that growth has been upbeat in recent quarters, I felt convinced that maintaining the prevailing tight monetary policy stance is appropriate at this time, albeit moderately due to other considerations highlighted above. I, therefore, voted for a moderate increase in the MPR by 25.0 basis points to 27.5 per cent, whilst leaving all other policy parameters at their extant levels.

7.  Lamido Abubakar Yuguda

Global Macroeconomic Developments

As global output continues to grow at a steady pace, the International Monetary Fund (IMF) projects growth to remain unchanged at 3.2 per cent in 2024 but increase marginally to 3.3 per cent in 2025. 

Economic growth in the Advanced Economies (AE) is expected to remain at 1.8 per cent in 2024 and 2025 with the US showing higher output expansion than both the EU and the UK. In the Emerging Market and Developing Economies (EMDEs) growth is forecast at 4.2 per cent in both 2024 and 2025 with India and China leading with growth projections of 7.0 per cent and 4.8 per cent respectively. The robust growth in India is supported by strong household consumption while the weakness in the Chinese property sector has continued to weigh down on output.

Global inflation continues to moderate as both food and energy prices decline and labour cost pressures in AEs continue to ease. The IMF has revised its forecast for global inflation downwards to 5.8% and 4.3% in 2024 and 2025 respectively. Inflation in the AEs is forecast to fall to 2.6% and 2.0% in 2024 and 2025 respectively, as it approaches the long run objective of most AE central banks. 

In the EMDEs inflation is projected to slow to 7.9% in 2024 and 5.9% in 2025 owing to the decline in food and energy prices as well as continued monetary policy tightening. 

However, the crisis in the Middle East continues to pose a significant risk to the inflation outlook, as does the announced plan by the US President-elect to impose wide-ranging tariffs of up to 60% on US imports. Both could have severe repercussions on international trade flows with a potential negative impact on global and domestic inflation.

Domestic Economic Developments 

Nigeria’s GDP grew at 3.46% in the third quarter of 2024. This is higher than both the 2.54% recorded in the corresponding period of 2023 and 3.19% in the second quarter of 2024. This improved performance in the third quarter of 2024 was on account of the strong performance of the services sector which grew by 5.19% and contributed 53.58% to aggregate output. The agricultural and industrial sectors grew by 1.14% and 2.18% respectively during the quarter under review.

Oil output increased by 5.17% per cent in the third quarter of 2024 and contributed 5.57 per cent to aggregate output, while oil production averaged 1.47 million barrels per day during the same period. 

The composite PMI contracted after two months of expansion to 49.6 index points in October 2024 from 50.5 in September and 50.2 in August reflecting the impact of inflation on business activities. 

Headline inflation rose to 33.88% in October 2024, a significant increase of 1.18% from September 2024 (32.70%) marking an acceleration in the inflation rate. Core inflation (all items less farm produce and energy) increased to 28.37% in October 2024 from 27.43% in September 2024. Among all the measures of inflation, food inflation recorded the highest increase. Food inflation surged to 39.16 per cent year-on-year in October 2024, a significant increase from 31.52 per cent in October 2023.

Broad money (M3) grew by 38.33% at the end of the third quarter of 2024 compared to December 2023 a deviation of 22.73% above the provisional benchmark of 15.60% for 2024. This growth was driven by increases in both NFA and NDA reflecting increase in the local currency value of foreign asset holdings and growth of claims on the Federal Government and other sectors, respectively. The growth in broad money is inconsistent with the current monetary policy tightening stance and could be contributing to inflationary pressures. 

The banking system remains strong, with key financial soundness indicators such as the capital adequacy ratio (CAR), Non-Performing Loans (NPLs) ratio and the liquidity ratio (LR) all within prudential limits.

The fiscal data as of August 2024 showed that FGN revenue fell short of target by 60.2% while expenditure achieved 84.2% of the budget projection. Whereas capital expenditure underperformed by 51.2%, recurrent expenditure exceeded the budget target by 3% primarily on account of higher than projected foreign debt service. Consequently, the fiscal deficit exceeded the budget projection by 80%. 

The public debt stock increased to N134.69trn in the second quarter of 2024 compared to N121.67 in the first quarter of 2024 owing to both increased borrowing and revaluation of the foreign debt component. 

The overall balance of payments recorded a surplus of US$2.47bn in the second quarter of 2024 compared to a deficit of US$0.95bn in the previous quarter. The gross external reserves position at the end of October 2024 was US$39.68bn, equivalent to more than nine months of imports of goods and services.

Key Risk Factors

The significant monetary policy tightening over the past one year, against a backdrop of deepening collaboration between the monetary and fiscal authorities, has helped significantly to stabilize the exchange rate and tame inflation in the face of unprecedented domestic price developments. Inflation had started trending down falling for two consecutive months in July and August 2024 – until the most recent hikes in the pump price of PMS to levels considered consistent with current market realities. Output growth has remained resilient while external buffers have been rebuilt. The balance of payments is in surplus again and foreign exchange reserves have increased significantly, owing to an increase in the current account surplus, and enhanced personal remittance and capital inflows. 

Oil production has improved marginally and if this is sustained it is expected to reflect in higher government revenues. It is also reasonable to expect that the cycle of PMS price hikes has run its course and oil subsidy has now been effectively eliminated. In addition, the lagged effect of previous monetary policy tightening continues to dampen prices and improve the outlook for inflation. 

However, there are risks to the outlook. Given the policy pronouncements of the incoming US administration favouring increased US oil production, lower global oil prices are a possibility. Nigeria must therefore continue efforts aimed at diversifying from dependence on oil. Given its huge and growing population and limited fiscal space, Nigeria must embrace well-designed and well-governed PPPs to build and upgrade infrastructure, especially power, railways, highways and inland waterways to realize the full potential of its rich economy. This should lower the cost of power and transport, encourage location of industries in the hinterland, increase production in the export sector, promote import substitution, grow foreign exchange reserves, improve per capita income and consumption spending, and enhance Nigeria’s competitiveness as an investment destination for both FPI and FDI.

While inflation has generally come down significantly in the AEs, inflationary pressures in many AEs have not completely disappeared and this may slow the expected pace of monetary policy easing, leaving government bond yields relatively elevated. While capital flows to EMDEs are expected to continue, this may happen at a slower rate. 

The FGN budget performance shows the dominance of recurrent expenditure over capital expenditure and the fact that much of government borrowing is used to finance recurrent rather than capital expenditure. In order to reduce the structural rigidities keeping Nigeria from achieving stronger non-inflationary economic growth consistent with its potential, revenue must be gradually increased, and expenditure restructured in favour of more capital spending. 

In view of the foregoing, it is necessary to maintain the tight stance of monetary policy in order to sustain the efforts at disinflation, maintain the stability of the exchange rate and protect the external buffers. 

Consequently, I voted with other members of the Committee to: 

1. Raise the MPR by 25 basis points to 27.5% from 27.25%; 
2. Retain the asymmetric corridor around the MPR at +500/-100 basis points; and 
3. Retain the Cash Reserve Requirement: Deposit Money Banks at 50% and Merchant Banks at 16%; 
4. Retain the Liquidity Ratio at 30%.

8. Muhammad Sani Abdullahi

My Vote

Inflation remains a significant challenge to the Nigerian economy despite efforts this year by the Monetary Policy Committee’s (MPC) to reverse its trend. Previous measures, including a cumulative 850 basis points increase in the policy rate, have yet to bring inflation under control, leaving real interest rates in the negative region as inflationary pressures remain. A temporary easing of price development in July and August was reversed in September and October, with headline inflation reaching 33.88% year-on-year. This resurgence is, largely due to higher prices of Premium Motor Spirit (PMS), which pushed up transport costs while both core and imported inflation remain a cause for concern. 

To address these pressing challenges and guide inflation back to the target range, further decisive action is required. I firmly believe that maintaining our current policy course is necessary until we observe a definitive shift in inflation trend and a sustained reduction in headline inflation. Therefore, I voted to: 

1. Increase the MPR by 25.0 basis points, bringing it to 27.50% from 27.25%.
2. Retain the asymmetric corridor around the MPR at +500/-100 basis points. 
3. Increase the Cash Reserve Requirement (CRR) for deposit money banks by 500 basis points to 50.00% and merchant banks by 200 basis points to 16.00%. 
4. Maintain the Liquidity Ratio at 30.00%.

My Considerations 

Inflation Trends and Dynamics 

The fight against inflation has proven to be a persistent challenge. While the Committee’s previous responses showed promising signs in July and August 2024 with a decline in headline inflation, this progress was short-lived as September and October saw a resurgence in inflationary pressures, with headline inflation rising to 33.88% in October 2024, from 32.15% in August. This resurgence was evident across various measures of inflation, food, core, and imported inflation, underscoring the complexity of the challenge and the need for a comprehensive policy response. Despite previous rate hikes and complementary measures, the key drivers of inflation persist, demanding a multifaceted approach that combines monetary and structural policy actions. 

Several factors contribute to this complex inflationary environment. Domestically, supply-side constraints continue to disrupt the efficient flow of goods and services, leading to increased costs. These constraints include bottlenecks in the agricultural sector, stemming from insecurity in food producing regions, which limit food supply and drive-up prices. Inadequate transportation infrastructure, particularly for perishable goods, and insufficient storage facilities further exacerbate these challenges by contributing to spoilage and higher costs. 

Externally, imported inflation poses a significant challenge to domestic price stability objectives. Nigeria’s dependence on imported goods leaves the economy vulnerable to fluctuations in global prices and exchange rate movements. Currently, imported inflation stands at a concerning 40.96%, highlighting the substantial impact of external price pressures on the domestic economy. This vulnerability is exacerbated by the ongoing global price increases for essential imports such as wheat, refined petroleum products, and fertilizer, which are critical for domestic consumption and production. Adding to these challenges, the recent rise in core inflation is largely attributed to supply-side constraints, particularly the rise in Premium Motor Spirit (PMS) and other energy prices which has significantly impacted transport and logistics costs, further feeding into headline inflation. 

To effectively tackle inflation, a multi-pronged approach that integrates fiscal, monetary, and structural policies is essential. While monetary tightening measures play a vital role in managing aggregate demand, its full impact may take time to materialise if not complemented adequately by fiscal and structural policies. to address the underlying causes of inflation. 

Key actions already taken by the Committee include tightening monetary policy to curb excess demand and manage inflation expectations, while the fiscal authority is also addressing supply-side issues such as infrastructure gaps and ramping up food production. Additionally, the passthrough effect of exchange rate fluctuations remain significant, as imported inflation is closely tied to changes in the exchange rate. This dynamic is central in the New Keynesian Phillips Curve with exchange rate debate. Thus, over the long term, stabilizing the currency, improving export competitiveness, and ensuring a stable fiscal environment will be critical to achieving sustainable inflation control. As part of a broader strategy to tackle inflation, stronger exports could help stabilize the exchange rate by reducing net imports, thus easing inflationary pressures. In addition, current efforts in refining the monetary policy implementation framework to strengthen the transmission mechanism of our monetary policy actions. 

To address food inflation specifically, targeted investments in transportation and storage infrastructure for food and other agricultural products are critical. Reducing supply chain bottlenecks and transportation costs will thus help lower food prices. Tackling core inflation requires mitigating supply-side constraints, such as the rising cost of PMS, which has driven up transport and logistics expenses significantly. Current initiatives to enhance domestic refining capacity are expected to reduce the reliance on imported refined petroleum products, thereby mitigating the pass-through effects of prior shocks and stabilizing the local currency. 

Domestic Economic Developments 

External Sector 

Nigeria’s external sector remains resilient, with a Balance of Payment (BOP) surplus of US$6.287bn in Q3 2024, driven by surpluses in goods accounts and robust remittance inflow. This trend, if sustained, could impact positively on the exchange rate. The Bank’s reforms have improved external reserves to US$40.88bn as of November 19, 2024, providing coverage for 17 months of imports. Measures to sustain and expand export earnings, alongside improved remittance inflows, will further strengthen the external sector and support exchange rate stability. 

Formal remittance inflows reached USD 4.18 billion as of October 2024, reflecting a significant improvement. The launch of the NIBBS Non-Resident Accounts in October aims to expand the remittance space, reduce barriers for Nigerians in diaspora, and align with national goals to double remittance inflows into Nigeria. Additionally, measures are being implemented to strengthen the existing regulatory framework and remove Nigeria from the FATF/AML Grey List. These initiatives will no doubt improve foreign exchange inflows, support forex market stability, and mitigate inflationary pressures. 

Other Developments in the Economy 

On output, Nigeria’s economy showed signs of acceleration in Q3 2024, with real GDP expanding by 3.46% year-on-year (YoY), up from 3.19% in Q2 2024. Growth was largely driven by the Services sector, which recorded a robust growth of 5.19%, significantly boosting output. However, the Purchasing Managers Index (PMI) decelerated moderately to 49.60 in October 2024, from 50.50 in September, reflecting the impact of high input prices across key sectors, including industry, agricultural, and services.

Despite the positive GDP growth, challenges remain and need to be addressed. High input prices are impacting various sectors, and the deceleration in the PMI suggests potential headwinds to economic activities. Addressing these challenges will require a focus on improving productivity, enhancing competitiveness, and mitigating the impact of high input costs on businesses. 

Developments in the labour market in Q3 2024 were encouraging, with unemployment rate declining to 4.3%, from 5.3% in Q2 2024. Time-related underemployment rate also dropped to 9.2%, with rural unemployment improving to 2.8% in Q3 2024, from 4.3% in Q2. These improvements are expected to boost consumer spending, reduce poverty, and promote longterm economic prosperity.

Broad money liabilities recorded a month-on-month decrease of about N1.7trn in October 2024, marking the first decrease in nine months, driven by contractions in both private sector credit and foreign currency deposits. 

The banking sector remains robust, continuing to support economic activities, with non-Performing Loans (NPLs) well below the prudential threshold of 5.0%. In addition, the Central Bank remains vigilant in ensuring financial system stability and soundness. 

Despite the positive trends in the external and other sectors, risks to the fiscal outlook include rising public debt, which reached approximately 56% of GDP by the end of Q2 2024, and the declining oil revenue projections for 2025. These factors could exacerbate Nigeria’s debt situation. However, the fiscal outlook could improve with increased revenue mobilization and the implementation of measures to rebuild fiscal buffers as outlined by the Presidential Fiscal Policy and Tax Reforms Committee.  

My decision to vote for a 25-basis-point increase in the policy rate, while keeping other parameters constant, reflects my commitment to addressing inflationary pressures, ensuring price stability, and supporting long-term economic growth. This decision aligns with the established policy framework, balancing the need for sustained economic expansion with effective inflation management. I am confident that this policy stance, in conjunction with complementary fiscal and structural measures, will contribute to achieving our macroeconomic objectives and foster sustainable economic development.

9. Murtala Sabo Sagagi

Context

The legacy issues that constrained the sustainable growth of the Nigerian economy are yet to be overcome even with the massive reforms implemented by the government. The structural rigidities, geopolitical tensions, excessive government spending, unabated use of cash by the government and populace as well as weak institutions continue to limit policy transmission mechanisms and present challenges to the achievement of Nigeria’s ambition towards a one trillion dollar economy. Accordingly, while the Central Bank of Nigeria has continued to implement policies that aim to ensure price and foreign exchange stability which would, in turn, stimulate growth and employment generation, the efficacy of the policies largely depend on effective fiscal-monetary policy coordination. 

Global and Domestic Environments 

Inflation and regional tensions were the main source of the volatilities witnessed in most of 2024. This trend is gradually improving and the prospect for global stability is positive. The global economy is growing modestly and the prospect for further growth remains positive. Growth in the Advanced Economies is projected at 1.8 per cent in 2024, and expected to be driven by US which is projected to grow by 2.8%. The improved market confidence that greeted the emergence of Donald Trump, as the elected President, is an endorsement to the anticipated shift in US economic policies. In the Emerging Markets and Developing Economies (EMDEs) growth is moderating at 4.2 per cent and it is expected to remain at the same level in 2025. Within the EMDEs, India is also experiencing modest growth as a result of increased consumer demand while growth in China slows due to limited consumer spending. In Sub-Saharan Africa, economic growth is expected to rise from 3.4% in 2023 to 3.8% in 2024 (IMF, 2024).

Global inflation eased from 6.7% in 2023 to 5.8% in 2024 (IMF, 2024). The decline in inflation is partly due to the sustained tight monetary stance by central banks and fiscal policies to address food and energy supply gaps. The coordinated approach to addressing global inflation and lessening supply chain disruptions will further reduce inflation to 4.3% in 2025. With positive outlook for growth, further rate cuts in 2025 would, in turn, spur global growth and reduce unemployment. Already, private consumption is stimulating a surge in equity markets, stocks and treasury yields in the US. 

In Nigeria, YoY headline inflation increased to 33.88 per cent in October 2024 compared with 32.7 per cent in September. At the same time, real Gross Domestic Product (GDP) grew by 3.46% (year-on-year) in the third quarter of 2024. This growth is higher than the 2.54% recorded in the third quarter of 2023 and higher than the second quarter growth of 3.19%. The exchange rate improved from N1,660.33/US$ on September 24, 2024, to N1,647.47/US$ by the end of October 2024, while the overall balance of payments recorded a surplus of US$2.47bn in Q2 2024, from a deficit of US$0.95bn in Q1 2024. The external reserves increased by 0.99 per cent to US$39.68bn at-end October 2024, from US$ 39.29bn at-end September 2024. With the current measures implemented by the Bank, external reserves is expected to improve modestly in November. 

Even with the improved balance of payment and foreign reserves, the public debt stock grew to N134.69trn in Q2 2024, from N121.67trn in Q1 2024. This was caused largely by the exchange rate revaluation within the period, and increased domestic borrowings to fund government expenditure. The fiscal performance between January and August 2024 showed a revenue shortfall with over budgeted expenditures. As of August 2024, the fiscal deficit exceeded the budget projection (N6, 070.16) billion by 80.13 per cent at (N10, 934.24) billion). The excess spending by the government is one of the biggest monetary policy challenges in the country. The rate increases overtime stimulated increased demand for NTBs due to the attractive yields. However, activities in the equities market remained weak owing to the improved yields in the fixed income market. 

Major Considerations 

1. GDP increased despite the tightening stance. 
2. Inflation ticked up in October mainly because of increase in food prices 
3. Cash outside the banking system rose by 271.85 billion to 4.28billion in October. This is not unconnected to the hyper activities of middlemen as public and private funds were injected to mop up agricultural commodities.
4. The slowdown in China may impact Nigeria’s exports
5. Increasing public debt due to shortfall in revenues and increasing public spending may negatively impact inflation 
6. Positive current account balance mainly due to reduction in imports 
7. Foreign reserve has increased to US$39.69bn at end-October 2024

Conclusions 

The implication of the global economic outlook to Nigeria is mixed. While the positive growth and easing inflation provide a measure of stability, the continued high yields in advanced economies may reduce inflows to EMDEs. With a high foreign debt portfolio and foreign exchange challenges, Nigeria requires continues inflow of foreign exchange. At the moment, a stronger naira is critical to signal stability in the exchange rate market and expectantly to anchor inflation. The inflows expected from maintaining a tight monetary stance will also provide government with an opportunity to restructure the country’s huge debt profile which is increasingly becoming unsustainable. Indeed, the country must fix its fundamentals to guarantee sustained inflow of both foreign investments and export revenues. 

My Vote 

• Increase the Monetary Policy Rate (MPR) by 25 basis points. 
• Retain Asymmetric Corridor around the MPR to +500-100 basis points.
• Retain the Cash Reserve Ratio of Deposit Money Banks at 50%.
• Retain the Cash Reserve Ratio of Merchant Banks at 16%.
• Retain the Liquidity Ratio at 30%.

Recommendations 

1. The enabling environment for both foreign and domestic investors must be improved in the short to medium term. Tremendous attention should be placed on doing business at the sub-national levels. 
2. Attaining food security is still a challenge for the country. A holistic approach to agricultural transformation involving federal government and states is needed urgently. 
3. Efforts to enhance security across the country should be intensified and the governance of the security architecture must be improved. 
4. The operating and transaction costs of producers are eventually passed on to the consumers. There is the need for integrated policy interventions to support technology upgrading and innovations to enhance the competitiveness and cost-effectiveness of domestic producers. With lower prices, consumer spending and investments will be enhanced.

10. Mustapha Akinkunmi

Context

Inflation surged to 33.88% YoY, largely driven by the increase in PMS prices in September and October 2024, rising from N617 to N897 and N1,030 per liter. High inflation continues to worsen food insecurity, which has escalated to 62.4% (NBS 2023/2024 Household Living Standard Survey), compared to 36.9% (NBS 2018/2019 Household Living Standard Survey). The unified exchange rate approach has significantly improved transparency in the foreign exchange market, almost eliminating the spread across markets. However, there remains a need to focus on revenue inflows from crude oil sales, particularly with the potential supply shock in 2025 from the US Government as the newly elected President takes Office. Nigeria’s GDP growth accelerated to 3.46% in Q3 2024, driven by the services sector, and surpassing the 3.04% growth in Q2 2024. However, real sector growth remains stagnant, with agriculture growth unchanged at 1.4% and manufacturing growth declining to 0.9% in Q3 2024. To maintain the mandate of price and financial sector stability amidst these challenges, I recommended a further increase of the Monetary Policy Rate (MPR) while retaining the asymmetric corridor of +500 and -100 basis points around the MPR. 

The Global Economy 

Global economic growth remains heavily reliant on emerging economies, which are projected to grow at nearly 7%, while growth in the Advanced Economies is expected to stabilize around 3%. According to the revised IMF Growth Projection in October 2024, Spain is expected to lead the advanced economies with a growth rate of 2.9%, slightly ahead of the US at 2.8%. In the Emerging Markets and Developing Economies (EMDEs), India is poised to take the lead with an impressive 7.8% growth rate, while China is projected to grow at 4.8% due to its weakened property sector. However, these anticipated growth rates may face risks from supply disruptions driven by escalating geopolitical tensions and tariff threats by the incoming President Trump.

Advanced economies outperformed expectations, while the UK economy showed modest growth: In the US, the annual growth rate of real GDP reached 2.8% in Q3 2024, down slightly from 3.0% in Q2 2024, driven by increased consumer spending and private investment. The Eurozone’s GDP grew by 0.4% in Q3 2024 (compared to 0.2% in Q2 2024), supported by stronger-than-expected growth in Germany and France. The UK economy performed below expectation, growing modestly at 0.1%. This growth was primarily driven by the services sector, which grew by 0.1%, and the construction industry, which recorded a growth of 0.8%. The production sector, however, contracted by 0.2% compared to the previous quarter, reflecting weaker performance in manufacturing and industrial activities. In, Japan, real GDP expanded by 0.9% on an annualized basis in Q3 2024, marking the second consecutive quarter of positive growth. This improvement was driven by private consumption and resident tax cuts. 

Faster growth continues to drive expansion in EMDEs: In Q3 2024, Nigeria’s GDP grew by 3.5%, reflecting an improvement of 0.27% compared to the previous quarter. This growth was primarily driven by the services sector, which contributed about 54% to aggregate output. Similarly, China’s annual growth rose to 4.6% in Q3 2024, spurred by improvements in factory output, retail sales, and fixed asset investments. Meanwhile, India recorded a fasterthan-expected expansion of 8.4% in Q3 2024, driven mainly by investment and manufacturing activities. Looking ahead, strong growth is anticipated in EMDEs, with growth in India projected at 7.0%, while China is expected to grow at 4.8% in 2024. Nigeria is forecasted to achieve an annual growth rate of 2.9%, supported by improvements in oil and agriculture outputs, supported by enhanced security. Additionally, net inflows of US$1.9 billion into emerging markets in October 2024 have put investors in a favourable position. 

Inflation pressures persist, with Japan as a notable exception in October 2024: In the Advanced Economies, inflation is projected at 2.6% in 2024 and 2.0% in 2025. However, ongoing conflicts in Ukraine and the Middle East may elevate inflation risks. In the US, inflation rose slightly to 2.6% in October 2024 from 2.4% in September 2024, driven by a decline in gasoline prices and modest grocery inflation, while housing inflation remained persistently high. In the Eurozone, inflation increased to 2.3% in November 2024 from 2.0% in October 2024. Similarly, inflation in the UK rose from 1.7% in September to 2.3% in October 2024. However, in Japan inflation declined to 2.3% in October from 2.5% in the previous month, primarily due to decline in core inflation excluding fresh food prices.

Mixed directions showcased in EMDEs inflation rates in October 2024: In the EMDEs, inflation is projected to reach 7.9% in 2024 before declining to 5.9% in 2025, driven by anticipated reductions in food and energy prices and continued monetary tightening amid the Middle East crisis. In South Africa, inflation decreased consistently to 2.8% in October 2024 from 3.8% in September. Inflation in China, dropped to 0.3% in October 2024 from 0.4% in July, mainly due to declines in non-food prices, transport and housing costs. In contrast, inflation in India surged to 6.2% in October 2024 from 5.5% in September, primarily due to rising food prices. In Ghana and Egypt recorded inflation increased to 22.1% and 26.5%, respectively, in October, up from 21.5% and 26.4% in the previous month. In Kenya, inflation rose by 0.1% in November 2024, driven by higher prices for food and non-alcoholic beverages. 

Monetary policy rates in the global space remain divergent: The US Federal Reserve reduced its policy rate by 25 basis points, bringing it to a range of 4.75-5.00%. Similarly, the ECB, Canada, and the Bank of England cut their rates to 3.25%, 3.75%, and 4.75%, respectively. Japan maintained its rate at 0.25%, unchanged since its August meeting. Most EMDEs either retained or lowered their rates, with the exception of Nigeria, which tightened its monetary policy rate by 25 basis points to 27.50% during its November meeting. Ghana and South Africa reduced their policy rates by 200 basis points and 25 basis points, respectively, to 27% and 8%. Egypt, however, retained its rate at 27.25%. 

Global economic health improved slightly in October 2024 to 52.3 index points against 51.9 points in the previous month primarily driven by growth in new business: The Global Services PMI rose from 52.9 index points to 53.1 index points in October, supported by growth in new business, new export orders, and a reduction in input prices. Meanwhile, the Global Manufacturing PMI improved to 49.4 index points in October 2024, although it remained below the 50.0 points threshold, reflecting contractions in new orders, employment, and stock of purchases. 

The Domestic Economy

Despite the persistent inflationary pressures, Nigeria’s economic growth rate continued to improve: The economy grew by 3.46% in Q3 2024, compared to 3.19% in Q2 2024, driven by the non-oil sector, which contributed 94.43% to overall growth. Robust growth of 5.19% in the services sector bolstered the country’s improved performance, while in the real sector, agriculture and manufacturing grew steadily at 1.14% and 0.92%, respectively. Additionally, the economy’s health condition improved slightly by 0.13 basis point, surpassing the 50.0 index point threshold in Q3 2024, supported by resilient economic activities in the services and agriculture sectors. 

Oil production keeps closing the OPEC Quota gap as it attained 1.55 mbpd in Q2 2024 against 1.41 mbpd in 2023: The upward trend in the oil upstream industry was driven by improved security and the new Utapate oil stream, which is currently producing 28,000 bpd with plans to increase production to 50,000 bpd. This positive trend is expected to continue in the coming years as issues such as crude oil theft and aging infrastructure are effectively addressed. Consequently, this would further boost the Q3 2024 oil sector growth of 5.17% (compared to 10.15% in Q2 2024), positioning the country competitively among other oil-producing peers such as Libya, Algeria, and Congo. However, the country’s downstream performance remains constrained by inefficiencies in the PMS market, which have recently pushed the cost of energy over N1,000 per litre. 

Nigeria’s headline inflation rose: Inflation rose by 118 basis points to 33.88% in October 2024, up from 32.70% in September 2024. This increase was driven by the rising costs of food and non-alcoholic beverages, exacerbated by insecurity in farming communities, poor transportation infrastructure, high energy costs, exchange rate pressures, and the removal of the PMS subsidy. Food inflation also climbed by 139 basis points to 39.16% in October 2024, compared to 37.77% in September 2024, largely due to the impact of flooding in key food-producing states. Similar inflationary trends are evident globally, with Egypt and Ghana experiencing double-digit inflation rates exceeding 20%, comparable to Nigeria’s situation. The external reserves also increased to US$40.2 billion by the end of November 2024, up from US$39.7 billion in October 2024, driven by crude oil-related tax receipts and FX purchases. Oil revenue declined by 1.9% to US$12.2 billion in Q2 2024 compared to Q1 2024, attributed to reduced earnings from oil and gas exports. Crude oil and gas accounted for 87.4% of total exports, with Europe as the primary destination. Global crude oil prices increased marginally to $68.595 per barrel at the end of November 2024 compared to the previous month. Nigeria contributed approximately 5% of OPEC’s total crude oil production (26.97 mbpd) in October 2024. As global oil supply continues to rise, the US is expected to lead non-OPEC supply growth in both 2024 and 2025, with Canada, Guyana, and Argentina also projected to increase their output.

The bulk of banking industry assets attained a year-on-year growth of 44.16 per cent in October 2024. Commercial banks accounted for the largest share of industry assets (96.8%), deposits (97.2%), and credit (98.1%). Additionally, banks with international authorization accounted for the highest share of industry assets, deposits, and credit at 71.2%, 71.4%, and 72.1%, respectively. The banking industry’s assets grew year-on-year by 44.16% to N157.51trn in October 2024. Deposits increased by 48.15% year-on-year to N95.42trn, while credit rose by 36.72% year-on-year to N58.97trn. However, on a monthly basis, industry assets declined by N0.21trn (0.13%) in October 2024, driven by decreases in total investments and net loans. Deposits also fell by N0.37trn (0.39%), primarily due to declines in domiciliary account balances. Similarly, industry credit decreased by N0.09trn (0.15%) in October 2024 compared to September 2024.

Decision 

Amidst domestic challenges such as persistent inflationary pressures and continuous naira appreciation, it is both urgent and critical to control inflation and further strengthen the naira to build robust resilience against existing and potential global shocks. Additionally, it is vital to closely monitor the anticipated positive impacts of the 850-basis point hike in the MPR since February 2024, coupled with increasing oil production and ongoing fiscal reforms. 

However, while the increased MPR has come at the expense of growth, it has also contributed to improved bank profitability, enhanced foreign exchange reserves, moderated inflation, and increased pension assets. 

In light of the above, I voted to increase the Monetary Policy Rate (MPR) by 25 basis points and to retain the asymmetric corridor of +500 and -100 basis points around the MPR.

11. Philip Ikeazor

Despite the continued tight stance, price levels remain elevated, and the economy faces inflation persistence due to prolonged inflationary pressures. In my view, a more aggressive stance is required, in circumstances, to curtail the momentum and bring inflation under control in the near-term.

I therefore voted to: 

1. Raise MPR by 50 basis points to 27.75% from 27.25%. 
2. Retain the Asymmetric Corridor at +500/-100 basis points. 
3. Retain the Cash Reserve Ratio (CRR) of DMBs at 50%. 
4. Retain the Cash Reserve Ratio of Merchant Banks at 16%. 
5. Retain the Liquidity Ratio at 30%.

Developments in the Global and Domestic Economy 

Given a robust growth in trade, improvements in real incomes, and a more accommodative monetary policy in several economies, albeit with a surge in global debt, the outlook for global growth and inflation in 2024 and 2025 remained as projected by the International Monetary Fund (IMF) in the third quarter of 2024.

Amidst the mixed outlook, most central banks are treading the path of monetary policy normalization with cautious optimism given that the outcome of the November 2024 United States election could reshape the global business landscape. Consequently, in 2025, the global economy may be confronted with heightened economic nationalism, trade deflection, exchange rate volatility, and geopolitical uncertainty—factors that could significantly alter the current dynamics of global growth and international commodity prices. 

In the domestic economy, the fiscal and monetary policy consolidation while not yet fully reflected in the general price level is fostering a robust monetary policy, maintaining financial stability and driving real growth. The potential for growth remains positive, as real output grew by 3.46% in the third quarter, up from 2.92% recorded in the second quarter of 2024, while headline inflation rose by 1.18% to 33.88% in October 2024, relative to 32.70 per cent in September 2024, driven by core and food inflation. 

Global growth is expected to remain resilient with declining inflation, despite significant risks and uncertainties, while the domestic economy is expected to achieve modest growth, a stable exchange rate, and a moderate deceleration in the rate of change in inflation.

My Considerations 

The Federal Government has implemented significant reforms to stabilize the economy, resulting in modest growth and improved fiscal space over the last two-quarters. With real output maintaining a steady growth, inflation, exchange rate pressures, and banking system liquidity have remained high, driven by the combination of rising energy prices, foreign exchange demand pressure and exchange rate depreciation. 

At end-October 2024, currency outside depository corporations grew by 24.9% compared with 17% recorded between September and August, even though money supply growth declined to 35.9% down from 38.1% in the same period. In terms of demand pressure on foreign exchange, the concentration of imports in the non-productive sector reflects a mismatch between foreign exchange demand and supply with the importation of Premium Motor Spirit and gas constituting US$2.82bn of the top 10 imports into Nigeria in Q2-2024. Although this represents a decline from US$2.92bn in Q1-2024, it still amounts to significant pressure on the utilization of foreign exchange and crowds out the productive sector that could have been a potential source of foreign exchange supply. 

Notwithstanding the tight monetary policy stance, the economy maintained a steady growth, a clear indication that the tight monetary policy cycle of the Bank is yet to reach its optimal level. Implicitly, the economy can attain low inflation without trading-off real output growth. Therefore, in supporting a hike in the policy rate, I considered the fact that a contractionary stance could slow down inflation without significantly constraining real growth.

To address these, a substantial hike in the policy rate will not only ensure that monetary policy sustains the pathway to stable prices but strengthens market expectations and the commitment to stabilize the economy. I was, however, mindful of the implications of a similar stance on CRR and its impact on the intermediatory role of the banking sector, particularly in the ongoing economic reforms of the Federal Government. Therefore, raising the CRR at this time could worsen the liquidity position of banks and hamper the supply of credit to the economy.

In addition, a simultaneous hike in MPR and CRR, could further raise the cost of production and complicate manufacturing capacity utilization which dropped from 52.4 in the last quarter of 2023 to 50 per cent in the second quarter of 2024. This could further increase cost-push inflation and worsen the Non-Performing Loan ratio. 

In the last MPC, I provided forward guidance on the intension to support a hike in rates if the fiscal actions of the Sub-national Governments continue to weaken the effective transmission of monetary policy. The support for a hike at this time was also meant to counteract the consequences of the frequent fiscal injections by the Sub-national Governments which research has shown to be a major source of inflation persistence in the economy. 

In conclusion, in keeping to the course of economic policy reform of the Federal Government, a supportive monetary policy is critical, to ensure a non-inflationary economic reform.

12. Olayemi Cardoso

Governor of the Central Bank of Nigeria and Chairman, Monetary Policy Committee 

The Monetary Policy Committee held its final meeting for the Year 2024 against the backdrop of mixed outcomes on key macroeconomic indicators. With the nominal exchange rate exhibiting relative stability over the second half of the year, it is cheering that the wide premium between the official and parallel market rates has been reasonably curtailed and the confidence of economic agents in the economy has reached a new high, manifesting in renewed capital inflows and favourable current account position, which cumulatively, have taken external reserves to over US$40bn as at 22nd November 2024. 

On domestic output, growth numbers continued to show the resilience of the economy with real GDP expanding by 3.46 per cent in Q3 2024 compared with 3.19 per cent in Q2 2024 and 2.54 per cent in the corresponding period of 2023. The performance has continued to be driven by both the oil and non-oil sectors, and staff forecast has shown that the economy would grow by 3.32 per cent in 2024. 

On the global front, the outlook presents one of cautious optimism. It is noteworthy that some of the central banks in the advanced economies have commenced a policy rate-lowering cycle, but this is at a cautious pace. While this development holds promise for emerging economies by potentially improving capital flows, it is important to recognize that the ultimate destination of capital is influenced by the domestic economic landscape. It is therefore necessary to sustain ongoing reform efforts to improve the fundamentals of the domestic economy and deliver macroeconomic stability to position Nigeria as a preferred destination among emerging markets. 

The extent of policy tightening that has already been implemented this year and the emerging results may tend to suggest the need for a hold option. However, the reversal of the inflation trajectory witnessed in September continued into October, with further uptick in inflation recorded due to the adjustments to the retail price of Premium Motor Sprit in the third quarter of the year. The latest inflation report indicates that headline inflation rose to 33.88 percent in October 2024, up from 32.7% in September 2024, driven by persistent shocks and structural constraints as both food and core components contributed to rising price levels. The outlook is equally fraught with new risks, prompting an upward revision to our short-term forecast. Key drivers include recent energy price adjustments for households and businesses and the pass-through effects of exchange rate depreciation on food, energy, and transportation costs. Furthermore, our efforts to mitigate demand-side pressures, though yielding results, continued to be limited by persistent high level of liquidity within the system. 

It is more worrisome that the sticky headline inflation and negative outlook portends the larger risk of de-anchoring inflation expectations by economic agents and thereby contributes to the persistent increase in prices across the economy. From the monetary policy perspective, the stance against inflationary pressures must therefore continue to be unwavering and our policy approach ought to be one of vigilance until we see a well entrenched deceleration trend in the inflation trajectory. 

My position derives further strength from the recognition that the positive results so far, notably the increased capital flows and relative stability in the foreign exchange market, alongside the narrowing of exchange rate disparities across different market segments, has been largely due to the bold tightening measures since the beginning of the year. 

Looking ahead, I remain optimistic that if we remain steadfast in our efforts, we can achieve our goals of stable and resilient macroeconomic environment. By staying the course, we will not only solidify the gains from the proactive policy measures, but we will also position the Nigerian economy for robust and sustainable growth by achieving price stability. 

Based on the foregoing and considering the balance of risk, I voted to: 

1. Increase the MPR by 25 basis points from 27.25% to 27.5%. 
2. Retain the asymmetric corridor around the MPR at -100/+500 basis points. 
3. Retain the Cash Reserve Requirement (CRR) for Deposit Money Banks at 50% and Merchant Banks at 16%. 
4. Retain liquidity ratio at 30%. 

Olayemi Cardoso
Governor
November 2024