The Central Bank of Nigeria (CBN) has no immediate plans to cut interest rates and definitely would not consider doing it until after the presidential election in February 2015, the new governor Godwin Emefiele said on Friday.
Emefiele signalled a dovish tone on interest rates on Thursday in his first news conference since taking up the post two days earlier, saying he would seek a gradual reduction in rates, which have been stuck at 12 percent for more than two years. [ID:nL6N0OM2DB]
“That’s an aspirational thing, it’s not a position we are taking right now. We will monitor monetary conditions and let people know,” Emefiele, who replaced suspended former governor Lamido Sanusi, told Reuters in a telephone interview.
The naira suffered selling pressure after Thursday’s news ss conference – it was at 164.90 to the dollar at 1 p.m. (1200 GMT) on Friday, 1.25 percent down since before Emefiele’s comments – but it later recovered to 162.95 on anticipation of dollar sales by state oil company.
Emefiele said his comments had been misinterpreted.
“I said there would be a gradual approach towards reducing interest rates…not that I was planning to start cutting interest rates now,” he said.
Liquidity tightening measures are credited with lowering inflation from 15 percent in 2010 to 7.9 percent currently. Some businesses say lending rates remain punitive and should be reduced to encourage investment.
“This will be fully dependent on monetary conditions and as you know we are under an election cycle,” Emefiele said. “So this definitely won’t be at least until way after the elections.”
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