Overview

Nigerian financial markets were mixed in September: bearish sentiments were sustained in the equities and FGN bond markets, pressure remained on the I&E window exchange rate of the Naira, while the T-bill market was bullish. On macros, headline inflation rose to its highest level since September 2005, increasing by 88bps to 20.52% y/y in August. Food inflation (+110bps to 23.12% y/y) rose to its highest level since October 2005, while core inflation (+94bps to 17.20% y/y) rose to its highest level since January 2017, given the unfavourable base effect from the prior year, elevated fuel prices, and currency pressure.

Elsewhere, the Monetary Policy Committee meeting of the CBN in the final week of September concluded with a decision to hike the Monetary Policy Rate by 150bps to 15.50% pa. The Committee highlighted that tightening was needed given the need to signal the firm determination of the authority to aggressively address its price stability mandate and narrow the real interest rate gap.

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