Chief Operating Officer of Guten Capital, Kingsley Okereke, has warned that developments in global financial markets could threaten Nigeria’s current low-interest-rate regime, urging the Central Bank of Nigeria (CBN) to remain cautious as it manages changing economic conditions.
Speaking during an interview with ARISE News on Friday, Okereke identified developments in global markets, particularly movements in the United States bond market, as a key threat to the current direction of monetary policy in Nigeria.
“The only threat to this current low interest rate regime signalling and the monetary policy decision is global development.”
Okereke said the CBN had been monitoring key economic indicators and had the necessary monetary policy tools to respond to developments that could affect the economy and financial markets.
“I believe CBN has a current handle of all those things, and they have an umbrella view, which enables them to even see vastly, beyond the indicators that we have, and they have their projections.”
He noted that the decline in inflation had provided room for the CBN to ease monetary conditions, pointing to the progress recorded in bringing inflation down.
“So they have done a very decent job, and we’ve seen how inflation has come down, even leading up to the last sprint that we had at 15.39%.”
The development came against the backdrop of the CBN’s recent interest-rate cut, which Okereke said was larger than many market participants had anticipated.
“Everybody was expecting 25 to 50 basis points. Even Bank of America was even cautiously optimistic of a cut.”
According to Okereke, the rate decision reflected improvements in Nigeria’s macroeconomic indicators, including lower inflation and stronger economic output.
“Our macroeconomic indicators have pretty much showed this inflation. GDP is up, inflation coming down, month on month, year on year.”
However, he said the sustainability of the current low-rate environment would depend not only on domestic indicators but also on developments in major international financial markets.
Okereke specifically identified the US bond market as an area investors should closely monitor, given its potential implications for financial conditions globally.
“What should even be concerning to most investors is the US bond markets.”
He explained that developments in major global markets could create ripple effects for other economies, including Nigeria, potentially affecting financial conditions and monetary policy.
“There’s ripple effects coming down to us. Coming down to everybody. Everybody’s cascading effect.”
Okereke also said he would be monitoring negotiations between the United States and Iran, citing their potential implications for the global economic and financial environment.
“I’ll be watching the US bond markets. I’ll be watching the negotiations between US and Iran to see if there’s any succour coming from there.”
He said the outcome of such international developments would be important for investors and policymakers, particularly as Nigeria seeks to sustain its current monetary-policy direction.
“These international developments will be important for investors and policymakers, especially as Nigeria seeks to sustain the current direction of monetary policy.”
Goodness Anunobi
Follow us on:
