Nigeria’s central bank governor used the Bangkok meetings to lock in the destination, if not the timetable, of the easing cycle. Olayemi Cardoso told investors on Wednesday that the Central Bank of Nigeria remains committed to a medium term single digit inflation target, arguing that inflation is the biggest threat to the poor and that settling for lower double digits is not acceptable. Inflation has fallen from about 34 to 35 percent to about 15 percent, he said, and the bank intends to embrace a formal inflation targeting framework that makes the path more transparent.
The fiscal side of the same event explained what the bond market is being asked to absorb meanwhile. Debt Management Office Director-General Patience Oniha said the fourth quarter borrowing calendar combines large refinancing with new volume, that volumes rose after the budget was passed, and that the office is watching rates and demand as it issues. Finance Minister Taiwo Oyedele, pitching investors at the same session, described the new Economic Development Incentive, a tax credit that replaces traditional tax holidays, alongside an official unemployment rate of around 5 percent and a poverty rate above 50 percent.
The remarks extend two threads from earlier this week. On Tuesday the IMF, in its updated outlook, pressed Nigeria to return inflation to target within its two to three year policy horizon and projected inflation of 14.7 percent by 2027. On Wednesday this edition carried a single-sourced BusinessDay projection that September inflation rose to 15.5 percent, ending three months of declines, ahead of the official National Bureau of Statistics release. Cardoso’s framing, that 15 percent is progress but not the destination, is designed to keep the easing path, which took the policy rate down 350 basis points to 23.0 percent in September, from being read as mission accomplished.
What would settle the argument is the September print itself. If it confirms an uptick toward 15.5 percent on fuel costs, the single digit commitment argues for a slower pace of cuts in November. If the decline is intact, the governor has given himself room to keep easing while pointing to the target as the anchor.