Nigeria holds rate at 12 pct, wants to lower it later

CBN Governor, Emefiele

Nigeria's central bank held interest rates at 12 percent on Tuesday, keeping them at the same level as the last two years, but its new governor said he would be seeking a gradual reduction in rates over the next five years.
Governor Godwin Emefiele, at his first Monetary Policy Committee (MPC) meeting since he was sworn in last month, flagged "underlying inflationary pressure" as one reason to be cautious and hold the policy rate as it is.
Nigeria's consumer inflation rose for the fourth straight month in June to hit 8.2 percent, a 10-month high, driven by higher food prices -- within the bank's current target of between 6 and 9 percent, but trending upwards.
"All measures of inflation have witnessed a progressive upward trend since February ... this trend should be monitored closely to achieve a reversal."
The corridor for borrowing from or lending to the bank remained 200 bps plus or minus that rate, the MPC decided. The liquidity ratio was retained at 30 percent. The private sector cash reserve requirement (CRR) was retained at 15 percent, while the private sector CRR was kept at 75 percent.
Emefiele said the bank was satisfied with relative stability in the macro economy and prices and that it welcomed a moderation in inflation, but he stayed the course of his predecessor Lamido Sanusi in keeping monetary policy tight.
Emefiele at his first press conference last month said he would seek to gradually reduce rates, in comments that send the naira down against the dollar.
But in an interview with Reuters the following day he clarified that there could be no rate cut until after the February 2015 presidential elections, when fiscal spending next has a chance to get under control.