Business
Nigeria raises benchmark interest rate to 8.75 percent
“The significant injection of liquidity from government in the third quarter, coupled with the impact of Asset Management Corporation Of Nigeria (AMCON) recapitalising banks, will both add to inflationary pressures,” he added.
Nigeria distributed a record US$8.5-billion to the three tiers of government in June, more than double the previous month. The government is due to implement a new law more than doubling the national minimum wage.
AMCON is helping re-capitalize Nigerian banks.
The central bank kept its 200 basis point corridor around the benchmark rate, so its recommended deposit rate is 6.75 percent and its lending rate is 10.75 percent.
Bond yields rose across all maturities this week in anticipation of a rate hike as investors sold debt with the aim of establishing new positions after the monetary policy committee (MPC) meeting.
The Naira, (Nigerian currency), has strengthened in recent weeks, following a lifting of the minimum holding period on government bonds by foreign investors.
Analysts said the interest rate decision would provide further support for the Naira, a key objective for Sanusi.
“With core inflation set to rise in second half of the year, and the growth outlook still robust, the central bank has laid down clearly its price stability credentials; look for the naira to strengthen further on this result,” said Razia Khan, Head of Africa Research at Standard Chartered.
Source: Reuters
Nigeria distributed a record 1
