Overview

Nigeria’s monetary authorities made very clear in July their determination to tackle inflation with interest rates, raising the policy rate by half a percentage point to 26.75%. The Treasury bill and bond markets followed suit, with market rates going up. At the same time, the pain of high inflation was keenly felt and led to the announcement of a series of protests in early August. The political authorities were quick to react, announcing a rise in the minimum wage.

On the fiscal front, a significant supplementary budget was announced, aimed at dealing with poverty. In this way, monetary and fiscal policy appeared to be diverging. The stock market lost ground and the currency weakened. The situation was not helped by weakness in oil prices, which fell on global concerns about Chinese and US growth, even as the tensions in the Middle East worsened. The only good item of news for the authorities was a rise in the gross foreign exchange reserves of the Central Bank of Nigeria, which have been trending upwards since mid-April

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