Finance

Inflation rate may hit 20% in first quarter —Experts

Economic and financial experts have said that the country’s inflation rate may rise further to 20 per cent during the first quarter of this year from the current 18.4 per cent.

They, however, said the inflation rate was expected to reduce significantly as the fiscal and monetary authorities would begin to implement certain policies to better the economy.

The experts made this known in investment notes detailing their outlook for this year on Sunday.

An economic analyst at Eco bank Nigeria, Mr. Kunle Ezun, wrote, “Inflation is likely to accelerate towards 20 per cent by the end of Q1 17, driven by fiscal expansion, energy cost and high FX cost caused by the over 30 per cent naira devaluation in 2016.”

“Slow but steady rise in liquidity arising from projected government spending in 2017 will add to the pressure on the naira owing to higher import demand; this will stoke inflation.”

Speaking further, he said tight monetary policy, higher borrowing and higher inflation rate would continue to put pressure on domestic interest rates.

He said, “Exchange rate uncertainties will persist due to sustained low oil prices, lower FX reserves, and robust import demand; we expect a managed inter-bank exchange rate of 305.50/dollar and a parallel market rate of 495/dollar in 2017.

“The naira will remain under pressure largely due to a structural imbalance between the dollar supply and demand, which will be reflected in proliferated FX market and rates.”

Source: Punch

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