Overview

Bearish sentiments prevailed in Nigerian financial markets during July, with both fixed income and equity markets delivering negative performances, while pressure remained on the I&E window exchange rate of the Naira. On macros, headline inflation rose to its highest level since January 2017, increasing by 89bps to 18.60% y/y in June. Food inflation (+110bps to 20,60% y/y) rose to its highest level in eleven months, while core inflation (+85bps to 15.75% y/y) rose to its highest level since February 2017, given increasing transport costs, the lingering food demand-supply gap, increasing diesel and aviation fuel prices, and currency pressure.

Elsewhere, the Monetary Policy Committee meeting of the CBN in mid-July concluded with a  decision to hike the Monetary Policy Rate by 100bps to 14.00% 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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