Nigeria’s central bank kept its benchmark interest rate on hold to battle persistently high inflation even as it seeks to boost lending to grow the economy.
The Monetary Policy Committee unanimously decided to hold the rate at 13.5%, Governor Godwin Emefiele told reporters Tuesday in the capital, Abuja. All but one of the six economists in a Bloomberg survey forecast the unchanged stance and one predicted a 50 basis-point cut.
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The unchanged stance could signal that Emefiele may double down on other measures to boost credit extension in an economy that’s still recovering from a contraction in 2016.
The central bank announced this month that lenders will no longer receive interest payments on deposits exceeding 2 billion naira ($5.5 million) and it has ordered banks to increase their loan-to-deposit ratio to at least 60% by September or face penalties.
While inflation in Africa’s top oil producer slowed to 11.2% in June, it has been above the target range of 6% to 9% for more than four years.
That, and the need to attract foreign inflows to prop up the naira, limits the scope for more rate cuts after 50 basis points of easing that was announced in March.
The efforts to ensure price stability “remain sacrosanct” even as economic growth is important, Emefiele said.
Tuesday’s unanimous decision compares with nine members of 11 who voted for an unchanged stance in May, when two favored easing.
Bloomberg