CBN retains benchmark interest rate at 11 percent

26 Jan 2016
Chibuike Oguh


Emefiele rebuffed calls to devalue the naira.

Governor, Central Bank of Nigeria, Godwin Emefiele

The Central Bank of Nigeria has retained its benchmark interest rate at 11 percent having lowered it from a record 13 percent in November.

Godwin Emefiele, the CBN Governor, spoke at the end of the apex bank’s Monetary Policy Committee meeting on Tuesday. He said the MPC voted unanimously to keep interest rates unchanged after deciding that the economy was still responding to the bank’s relaxed monetary policies. The MPC also voted to hold the cash reserve ratio at 20 percent.

Nigeria’s inflation stood at 9.6 percent in December, compared with 9.4 percent in November. Inflation crossed the CBN’s target rate of 9 percent in May 2015.

Emefiele rebuffed calls to devalue the naira by announcing that the apex bank would roll out a foreign exchange strategy to ease the pressure on the naira.

Although the CBN has maintained an official peg of N199 per dollar, the naira currently trades above N300 per dollar at the parallel market due to declining oil prices, which have fallen by over 70 percent in the past 19 months and slashed Nigeria’s foreign exchange earnings by over 40 percent.

In response to oil price shock, the CBN imposed strict forex controls, stopped the sale of forex to bureaux de change and for importation of over 41 items, among other measures.

Nigeria’s foreign reserves stood at about $28.27 billion as at January 25th.

Chibuike Oguh is Financial Nigeria's Frontier Markets Analyst

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