(Bloomberg) -- Nigeria's newly constituted Monetary Policy Committee held the nation's main lending rate at its first meeting this year as inflation pressures persist.
The committee, which admitted five new members last month, unanimously decided to leave the benchmark interest rate at 14 percent, central bank Governor Godwin Emefiele said at a press conference in the capital, Abuja on Wednesday. That was in line with predictions of all but two of 11 economists in a Bloomberg survey. The policy rate is tight enough to reign in current inflationary pressures, he said.
The MPC failed to convene as scheduled in January and postponed its March meeting because it lacked quorum after five members retired last year and lawmakers initially refused to screen President Muhammadu Buhari's replacement nominees because of political differences. They finally approved five of six candidates, including two new central bank deputy governors, on March 22.
Read more on why Nigeria's MPC was paralyzed by politics
Inflation in Africa's most-populous nation decelerated for a 13th consecutive month in February to 14.3 percent, but remained above the regulator's target of 6 percent to 9 percent. Policy makers have kept the main rate at a record high since July 2016 to reign in price growth and stem further naira declines, even as it tries to support an economy that contracted in 2016.
Emefiele said in January the MPC may start loosening policy before July if inflation moves closer to singe digits. The next meeting of the panel is scheduled for late May.
“The MPC is being pulled in two different directions at this point, with inflation still very high and it is not coming down as quickly as people had hoped, and growth is not increasing as fast,” Christopher Dielmann, a senior economist at Exotix Capital, said by phone from London. “As growth picks up and inflation comes down, we are likely in a situation where rates cut in the near future should not be unexpected, July is what I would expect.”
The International Monetary Fund forecast Nigeria's economy will expand 2.1 percent this year from less than 1 percent in 2017 as oil production remains stable and supply of foreign currency needed to import factory inputs improves. To support growth, lawmakers are set to vote on increasing this year's budget by 16 percent to 8.6 trillion naira ($24 billion), about 30 percent of which is for investment in roads, rail, ports and power.
--With assistance from Simbarashe Gumbo Elisha Bala-Gbogbo Pauline Bax Solape Renner and Emele Onu
To contact the reporters on this story: David Malingha Doya in Abuja at dmalingha@bloomberg.net, Tope Alake in Lagos at talake@bloomberg.net.
To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Ana Monteiro
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