Central Bank Cuts Key Interest Rate

Nigeria’s central bank on Thursday 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 percent 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 percent 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 percent 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 percent.

The fall in the oil price has gutted state revenues as crude accounts for some 90 percent of Nigeria’s foreign currency earnings.

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.