Nigeria Holds Key Rate at Record-High 14% on Inflation Risks

LAGOS (Capital Markets in Africa) – Nigeria’s central bank held its main lending rate at a record-high 14 percent as it seeks to bring inflation down to within its target band.

Of the nine members of the Monetary Policy Committee who attended this week’s meeting, eight voted to leave the benchmark rate, Governor Godwin Emefiele told reporters in the capital, Abuja, on Tuesday. That decision matched the median estimate in a Bloomberg survey.

Lawmakers only approved 2018 spending plans last week and President Muhammadu Buhari still needs to sign them off. The late passage of the fiscal framework and increased expenditure before next year’s election could raise price pressures, Emefiele said.

The central bank has help the rate since July 2016 in a bid to bring downinflation and prop up the currency. Price growth slowed to a two-year low of 12.5 percent, still above the authorities’ target band of 6 percent to 9 percent.

While Emefiele said in January the MPC may start to loosen policy before July if inflation moves closer to single digits, any possible easing has now been moved out to the second half of the year. The committee’s next meeting is scheduled for July 23-24 and inflation pressures could start building again due to increased government spending before next year’s election and rising food prices.

Source: Bloomberg Business News