Central Bank of Nigeria Holds Rate at 12.00%

The Central Bank of Nigeria held its monetary policy interest rate unchanged at 12.00%.  The Bank also held the cash reserve ratio at 8%.  Bank Governor, Lamido Sanusi, said: "These decisions have helped in controlling pressures on the general price level and in maintaining a relatively stable equilibrium in the foreign exchange markets. Where this equilibrium is disturbed by external factors, the ability to respond rapidly has succeeded in quickly restoring stability."

Previously the Nigerian central bank raised the the monetary policy rateby 275 basis points to 12.00% at its October meeting, after increasing by 50 basis points in September rate 75 basis points in July, and increasing it by 50 basis points at its May meeting this year.  Nigeria reported annual headline inflation of 10.5% in October, compared to 9.3% in August, down from 9.4% in July, 10.2% in June, 12.4% in May, 11.3% in April, and 12.8% in March, and just above the Bank's inflation target of 10%.  

The Nigerian government doubled the minimum wage to 18,000 Naira recently.  Nigeria reported annual GDP growth of 7.72% in the June quarter, after growing 7.43% in the March quarter, while the Bank is forecasting 2011 growth of 7.8%.  Nigeria's currency, the naira (NGN), has weakened about 4% against the US dollar so far this year, the USDNGN exchange rate last traded around 159.5.

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