Nigeria Central Bank Says Tightening More Likely Than Easing

The Central Bank of Nigeria is more likely to tighten monetary policy than ease it in the months ahead, Governor Lamido Sanusi said.

“We’re likely to remain where we are but if we’re going to move at all, we’re more likely to tighten than to ease,” Sanusi told journalists today in Paris. “I would advise against precipitate easing only to turn around after a few months and tighten.”

Sanusi said that inflation is under control and Nigeria’s currency, the naira, has held up well relative to other emerging market currencies. The Monetary Policy Committee kept the policy rate at a record high 12 percent for a 12th consecutive meeting on Sept. 24.

Inflation eased to 8.2 percent in August from 8.7 percent in the previous month, staying within the central bank’s target of less than 10 percent.

The naira has weakened 2.6 percent against the dollar this year and may come under more pressure as President Goodluck Jonathan estimates a 12 percent drop in oil and gas revenue in 2014. Sanusi said last month the bank is committed to use its currency reserves to support the naira. The central bank sells foreign currency at twice-weekly auctions to keep the naira within a range of 3 percentage points around 160 a dollar.

“Inflation should be down to under 8 percent by December,” Sanusi said. “The exchange rate has remained fairly stable, it’s pushing the band but it’s not lost anything near what we saw in India, South Africa or Ghana, so we’ve done very well on that score.”

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