Nigeria’s central bank will probably reinforce its anti-inflation mandate by holding its key interest rate at a record high tomorrow even as consumer prices in Africa’s largest oil producer ease.
The Monetary Policy Committee, led by Governor Lamido Sanusi, will keep the rate at 12 percent, according to all nine economists surveyed by Bloomberg. Sanusi is scheduled to announce the decision at a press conference that begins at about 2 p.m. in the capital, Abuja.
The Central Bank of Nigeria has maintained the benchmark rate since October 2011 to help stabilize the naira and keep price pressures under control. While that’s helped to bring inflation down to the lowest level in more than five years, it may not be enough to persuade the MPC to ease borrowing costs as Nigeria faces the threat of rising government spending in a pre-election year.
“I would expect the CBN to keep its policy rate unchanged,” said Gaimin Nonyane, senior macroeconomics specialist in London at EBI SA, a unit of Ecobank Group, said in an e-mailed reply to questions. “The probability of a rate cut is also low given growing potential for fiscal slippage amid weakening oil revenue and expenditure overruns ahead of the 2015 general election.”
The inflation rate fell to 7.8 percent in October from 8 percent in the previous month as food prices eased, according to the Abuja-based National Bureau of Statistics. Prices rose 0.8 percent in the month.
Nigeria relies on oil for about 80 percent of government revenue and 95 percent of export income. The price of crude has slumped 12 percent in New York in the past four months and was trading as low as $93.63 a barrel on Nov. 15.
Budget Week
President Goodluck Jonathan is due to present his 2014 budget to the legislature tomorrow, amid concern among investors that unplanned public spending may rise next year as campaigning begins for a 2015 election.
Unchecked government spending may lead to more rapid inflation and exert pressure on the local currency, which the central bank wants to keep within a range of 3 percent either side of 155 to the dollar. The naira has lost 1 percent against the dollar in the past six months to trade at 159.30 on the interbank market as of 5 p.m. in Lagos on Nov. 15.
Sanusi, who is due to leave the position when his term expires in June, said in an interview in late October that the bank has no plans to cut the interest rate as it concentrates on containing inflation.
Source: Bloomberg
No comments:
Post a Comment