How CBN’s hawkish stance impacts growth?

The recent moves by the Central Bank of Nigeria (CBN) have been generating positive outcomes, according to Governor Olayemi Cardoso. The focus on transparency to boost investor confidence, maintain price stability, and slow down inflation has been a key priority. AbdulAzeez Kuranga, an Economist at Stanbic IBTC Bank, joins CNBC Africa to discuss the expectations moving forward, the impact of Nigeria's high interest rate environment, and the anticipated first-quarter GDP report. The interview shed light on various key points in the economic landscape of Nigeria. The CBN Governor's commitment to addressing inflationary pressures and maintaining communication and transparency has been evident since assuming office. The recent Monetary Policy Committee (MPC) meeting announced a 150 basis points rate hike, which some analysts deemed aggressive. This rate hike will have different implications for the fixed income and equities markets, as well as various sectors within the real economy. The fixed income market has already seen the impact of higher interest rates, with yields on treasury bills and bonds increasing significantly. However, this has also led to challenges for interest rate sensitive sectors like manufacturing, real estate, and construction. These sectors are likely to experience a slowdown in growth compared to previous years, although a contraction in the economy is not expected. Looking ahead, the trajectory of inflation will determine future monetary policy decisions. Analysts expect inflation to peak by May-June and then moderate significantly by July. This aligns with the CBN Governor's forecast of inflation moderation in the coming months. The challenges in the interest rate mechanism and financial inclusion pose obstacles to the transmission of rate decisions to the broader economy. The GDP numbers for the first quarter are eagerly anticipated, with expectations of around 2.9% growth. The oil sector is expected to remain stable, supported by increased crude oil production, while the non-oil sector may face challenges due to factors like interest rate hikes and currency depreciation. Overall, the economic landscape in Nigeria is facing a period of transition and adjustment, with key stakeholders closely monitoring the developments to navigate through the challenges and capitalize on potential opportunities.