The United States economy delivered a stronger-than-expected jobs report in December, creating 256,000 jobs compared to economists’ expectations of 160,000.
This signals a more resilient labor market and is already reshaping expectations around the Federal Reserve’s interest rate policy.
For Nigeria, the implications could be significant, particularly for the naira, which faces renewed risks of depreciation.
For Nigeria, the latest jobs report raises concerns about the naira’s trajectory in 2025. Analysts had projected that a series of Fed rate cuts would boost capital flows into emerging markets, including Nigeria.
This would have provided support for the naira, which has been under pressure due to weak foreign exchange inflows and a widening trade deficit.
However, the likelihood of sustained high US interest rates now casts doubt on these projections.
The prospect of sustained high US rates poses several risks for Nigeria’s economy.
These developments also complicate the Central Bank of Nigeria’s (CBN) monetary policy objectives.
The apex bank, which is already walking a tightrope between controlling inflation and fostering economic growth, may find it increasingly difficult to stabilize the naira without substantial inflows of foreign exchange.