MONEY MARKET

Inflation uptrend bolsters investors demand for higher fixed-income market yields

THE persistent uptrend in inflation has significantly bolstered investor demand for higher yields in Nigeria’s fixed-income market. As the country grapples with soaring price levels, investors are increasingly seeking higher returns to compensate for the erosion of purchasing power, leading to a surge in demand for securities with more attractive yields.

This shift in investor sentiment is expected to have far-reaching implications for Nigeria’s fixed-income market as market players adjust to the new reality of higher inflation and rising yield expectations.

The domestic economy faced a mix of challenges during the week, with the National Bureau of Statistics reporting a 20 basis points (bps) increase in inflation, reaching 34.80 percent in December 2024, reinforcing the uptrend in inflation despite the Monetary Policy Committee (MPC’s) monetary tightening.

Market analysts said tighter system liquidity raised interbank rates above 30 percent last week.

The Open Repo Rate (OPR) and Overnight Rate (O/N) increased by 1847bps and 1755bps week-on-week to 32.23 percent and 32.75 percent, respectively.

READ ALSO: Inflation: FG moves to ramp up food production

Chima Nwokoji

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