Why Nigeria's rate cut may not yield right results - NKC African Economics

The policy committee of the Central Bank of Nigeria (CBN) convened on Tuesday, and defied our expectation by loosening the monetary policy stance.
The growthoriented monetary regulator opted to cut the policy rate by 200 bps to 11%, stating that “we must stimulate growth.” In addition, the interest rate corridor was widened to 700 bps below the policy rate, and 200 bps above the policy rate.
While the strong emphasis on economic growth does not come as a surprise – CBN Governor Godwin Emefiele’s tenure was kicked off with controversial growth-oriented policy decisions – we expected an adjustment in the cash reserve requirement as the avenue via which the central bank would loosen policy.
We continue to view the risks to inflation as tilted to the upside. As we stated previously, we are not in favour of stimulating growth by merely easing liquidity conditions under an inefficient trade channel.