Nigeria's central bank rules out lower interest rate in near term

The Central Bank of Nigeria (CBN) said the clamour for low-interest rate cannot happen in the near term due to the high level of inflation and rising costs in the economy.
Nigeria’s banking regulator has held its benchmark interest rate at 14 percent level for the consecutive seventh meeting in July as the CBN governor Godwin Emefiele claimed that “Low-interest rate will make it easy for people who want to borrow money, to borrow money at low rates.’
Member of the rate-setting MPC, Dahiru Balama said there is the need to encourage the inflow of FDI both real investment and hot money into the economy.
“The clamour for low-Interest rate cannot happen now because of the high level of inflation and rising operational costs in the economy,” Balama said at the last MPC meeting.
The MPC is expected to meet next week Monday and Tuesday to take a fresh decision on interest rate and the economy in general in the face of latest data shown that Nigeria has exited recession at the end of the second quarter of the year.

Nigeria, Africa's biggest economy Gross Domestic Product (GDP) grew by 0.55 percent year-on-year in real terms in the second quarter of the year, indicating the emergence of the economy from recession after five consecutive quarters of contraction since Q1 2016.
The CBN deputy governor, Adebayo Adelabu also agreed with his colleague on the MPC the need to sustain the present benchmark interest rate.
Adelaabu in his contribution noted that on the account of elevated inflation and the cost of rising non-performing loan (NPL) in the banking sector, the interest rate may not trend downward in the near term.
Private sector operators have been clamouring for lowering of interest rate to boost production in the economy and hasten the recovery of the economy.
However, policymakers have hinged their resistance to lower interest rate to possible pressure cheap borrowing could have on the foreign exchange market.