Key questions this article answers:
In its battle against inflation, the Central Bank of Nigeria (CBN) has embarked on the longest cycle of monetary policy tightening since 2015. Have these actions been effective?
The CBN's rapid interest rate hikes fuel fears of a recession. Is it too late to avert this unintended consequence of the CBN's actions?
I’ll start with a picture so we have something helpful to frame this debate with.
Below is a map illustrating different central banks’ approaches to managing inflation in the past year. The map shows that the main central banks have raised rates already this year, and many other countries did so last year.
Then below is a chart showing the International Monetary Fund’s (IMF) forecast for the global economy. The headline here is that things aren’t so great. Even with the slight revision upwards following the launch of the January growth outlook, the Fund still expects global growth to fall from 3.4% in 2022 to 2.9% in 2023.
The two charts matter here because much has been said about the battle between central banks and inflation. Quotes like “going higher for longer” and “staying the course” reflect the intent to stave off runaway inflation.