The Central Bank of Nigeria (CBN) kept the main interest rate at 14 percent as expected on Tuesday and pledged to close the gap between the official and black market exchange rate.
According to the CBN governor, Godwin Emefiele inflationary pressures were continuing unabated while Africa’s biggest economy was undergoing its first recession in 25 years, justifying the rate decision.
All but one of 13 economists surveyed in a Reuters poll had expected the bank to keep the benchmark rate on hold. “The (Monetary Policy Committee) MPC appears to have resisted pressure from the fiscal authorities for what might have been a premature easing of policy,” said Razia Khan, chief economist Africa at Standard Chartered Bank.
“By holding rates, and putting price stability at the centre of its ambition, the CBN (central bank) could well be preparing for a more meaningful liberalisation, to come eventually, only when conditions are more conducive,” she said.
Emefiele revealed that the central bank was optimistic that interventions in the foreign exchange market would stabilise the battered naira currency.