The Central Bank of Nigeria will probably hold its benchmark lending rate unchanged at a record high today to support the naira as oil revenue slumps and spending pressures increase before 2015 elections.
The Monetary Policy Committee, led by Governor Lamido Sanusi, will hold its policy rate at 12 percent for the 12th consecutive meeting, according to all 16 economists surveyed by Bloomberg News. The announcement will be made at a press conference that begins after 2 p.m. in the capital, Abuja.
Policy makers in Africa’s top oil producer have kept borrowing costs unchanged even as inflation met the central bank’s target of staying below 10 percent this year. The naira, which has weakened 3 percent against the dollar this year, may come under pressure as oil revenue is set to decline.
The central bank “would likely be very cautious to get too excited about the lower inflation rate,” Ridle Markus, Africa strategist at Absa Capital in Johannesburg, said by phone on Sept. 20. “The last thing they want to do is to send the wrong message to the market by cutting the policy rate too soon.”
Inflation (NGCPIYOY) eased to 8.2 percent in August from 8.7 percent in the previous month. Sanusi said in the last MPC meeting in July that the inflation rate will probably remain within its target through January.
The central bank targets the naira to keep consumer-price growth under control. It sells foreign currency from reserves to keep the naira within a band of 3 percentage points around 160 per dollar. Since the last MPC meeting on July 23, reserves fell 1.8 percent to $46 billion as of Sept. 19.
Oil Output
Reserves may come under pressure as oil revenues decline. Theft and vandalism of pipelines have cut production by about 400,000 barrels a day, according to government estimates. Crude output fell to 1.81 million barrels a day in March, the lowest since September 2009, according to data compiled by Bloomberg.
President Goodluck Jonathan said last week the government expects oil and gas revenue, the country’s source of more than 90 percent of foreign currency, to decline 12 percent next year.
Sanusi has defended the MPC’s tight monetary stance against calls from businesses and Finance Minister Ngozi Okonjo-Iweala to cut the policy rate to boost economic growth. In June, Sanusi said there may be more tightening “if the politicians spend money” before the elections.
Nigeria is scheduled to hold presidential, gubernatorial and parliamentary elections in 2015. Jonathan’s government had nearly doubled the monthly minimum wage of government employees to 18,000 naira ($113) before the elections in 2011, boosting spending in Africa’s most populous country.
“There will be some increase,” Gregory Kronsten, a strategist at FBN Capital in London, said by phone on Sept. 20. “If you look at the damage to the macro climate form the 2011 elections, yes there was some damage on the spending side but that was masked because production picked up.”
To contact the reporter on this story: Maram Mazen in Abuja at mmazen@bloomberg.net
Source: Bloomberg
No comments:
Post a Comment