The Monetary Policy Committee of the Central Bank of Nigeria may maintain its inflation-tightening stance at its last meeting of the year as inflation continues to rise.

At its September meeting, the Committee increased the Monetary Policy Rate by 50bps to 27.25 per cent, stating concerns over core inflation, money supply growth, fiscal deficits, and food price pressures.

Although headline inflation was trending downward at the time of the last MPC meeting, core inflation remained elevated, driven by energy costs and other structural factors.

In the statement read after the meeting, the Governor of the CBN, Olayemi Cardoso, stated that the members saw the efforts of the Federal Government in tackling insecurity in farming communities and stressed the need to remain steadfast.

Parts of the statement read: “In addition, the MPC applauded the ongoing effort of the Federal Government to bridge the food supply deficit through the duty-free import window for food commodities.

"The Committee also expressed optimism that lifting refined petroleum products from Dangote refinery will moderate transportation costs and significantly support the easing of food price pressures in the short to medium term.

“This is also expected to moderate foreign exchange demand for the importation of refined petroleum products, with a positive spillover on external reserves and an improvement in the overall balance of payment."

However, with inflation now on an upward movement, analysts have stated that the MPC may maintain its hawkish stance.

Analysts at Afrinvest opined that the MPC faces a difficult decision given the recent re-inflationary signals in major external economies, an uptick in domestic price levels, weaker Purchasing Managers’ Index readings, bureaucratic hindrance to Dangote’s supply of PMS locally, fiscal deficit build-up, and the sustained expansion in money supply (M3, the broadest measure of money supply, increased by 1.6 per cent m/m to N109.0tn in September).

In the latest PMI data released by the CBN for October, the composite PMI weakened to 49.6 points from 50.5 points in September, halting two consecutive months of broad-based expansion in the business environment.