Nigeria central bank cuts key interest rate

Agence France-Presse
Nigeria central bank cuts key interest rate
Nigeria, Africa's largest economy, slashes its key interest rate to 12.5% amid fears of a deep recession

ABUJA, Nigeria – Nigeria’s central bank on Thursday, May 28, cut its key interest rate to its lowest level since 2016 as the country struggles to limit the damage from the coronavirus crisis

The decision from the Monetary Policy Committee to lower the rate from 13.5% to 12.5% comes as authorities warn Africa’s largest economy risks a biting recession. 

The finance minister has warned the continent’s biggest oil producer could see its economy contract by up to 8.9% in 2020 in a worst-case scenario on the back of a plunge in crude prices.

The International Monetary Fund (IMF) has estimated Nigeria’s economy will contract by 3.4% this year

The central bank had previously been wary of cutting its key rate as inflation has crept up in recent months to over 12.3%.

The fall in the oil price has gutted state revenues as crude accounts for some 90% of Nigeria’s foreign currency earnings. (READ: Nigeria oil industry scrambles as price fall slams economy)

The authorities have looked to plug the yawning hole in the budget with increased borrowing and last month secured $3.4 billion in emergency funding from the IMF. –