Rewane: Interest rate slash will have to wait till January 2025

The CEO of Financial Derivatives Company, Bismarck Rewane, shared his insights on the current economic situation in Nigeria during an interview with CNBC Africa. Rewane highlighted that expectations for a moderation in inflation in September will be delayed until December 2025. He also mentioned that analyst expectations for a slash in interest rates will have to wait until January 2025. According to Rewane, many of the challenges contributing to inflation are structural, which complicates the relationship between inflation rates and consumer experiences. The discussion focused on the recent price hikes in the country, particularly in the petroleum sector and its impact on the cost of living crisis and inflation. He mentioned the ongoing discussions between NNPC and the Dangote Refinery regarding supply modalities and potential price increases. Rewane emphasized the importance of understanding the market structures, especially in the context of the current situation. He discussed the disagreement over equity stakes, pricing, and retail prices of petroleum products, highlighting the implications for consumers. The potential increase in petroleum prices could significantly impact consumers, leading to additional costs amounting to trillions of naira. Rewane urged for a strategic approach in managing these challenges, suggesting initiatives such as paying school fees and medical bills for Nigerian students and citizens to alleviate the burden on consumers. The conversation also touched on key economic indicators such as GDP growth, PMI, inflation, and external reserves. While these numbers show positive trends, the report questioned whether these improvements are translating into a better quality of life for Nigerians. Rewane highlighted the importance of moving towards equilibrium in factor prices to minimize disruptions in the economy. He pointed out indicators such as the reduction in the gap between parallel and official foreign exchange markets and the alignment in diesel prices as signs of progress towards equilibrium. However, he emphasized the need to address critical issues like petrol and electricity prices to ensure sustainable economic stability. Rewane stressed the significance of efficiently deploying and recycling collected funds to have a positive multiplier effect on the economy. He cautioned against wasteful spending and emphasized the importance of transparency and accountability in economic management. The interview concluded with a discussion on ongoing developments between Dangote and NNPC and the potential implications for pricing adjustments in the petroleum sector. Rewane's insights shed light on the complex economic landscape in Nigeria and the need for strategic reforms to address current challenges and opportunities for sustainable growth.