Business
Nigeria raises benchmark interest rate to 8.75 percent
Nigeria’s central bank raised its benchmark interest rate by a bigger-than-expected 75 basis points to 8.75 percent on Tuesday, the fourth increase this year in a fight against inflation.
Most analysts had expected the bank’s monetary policy committee to increase interest rates by 25-50 basis points, after hiking rates at its last three meetings.
Headline inflation fell to 10.2 percent year-on-year in June from 12.4 percent in May, approaching the central bank’s notional single-digit target, but Nigeria’s inflation figures are volatile and liquidity flows remain high.
Central bank Governor Lamido Sanusi (pictured), said sub-Saharan Africa’s second-largest economy grew 6.64 percent in the first quarter of this year, down from 7.36 percent in the same period in 2010. The central bank maintained its forecast for full-year 2011 growth of 7.8 percent.
Sanusi said despite the slowdown in GDP growth and tempering of inflation the committee members at the meeting had voted 10-2 to raise rates. He noted the uncertain global economic climate and Nigeria’s structural fiscal deficit as determining factors.
The bank last raised rates in May, by 50 basis points.
“The inflation outlook appears uncertain owing to the expected implementation of the new national minimum wage policy and the imminent deregulation of petroleum products,” Sanusi told a press conference in Abuja
