IMF warns Nigeria on interest rate

Channels Television  
Updated February 29, 2012
Naira hits 5-week high as US dollar flood Nigeria market


The International Monetary Fund (IMF) has warned the Central Bank of Nigeria (CBN) to pause its tightening on interest rates after the regulator raised its benchmark rate by 6 percentage points since 2010 to combat price pressures.

The IMF in a statement on Tuesday, called for “greater exchange-rate flexibility” saying what the country needs is a “clear” inflation objective that will help to anchor economic growth expectations.

Responding to the statement, CBN governor Sanusi Lamido Sanusi said the bank is in broad agreement with the IMF warning and that there was a pause in November and January once it became clear that inflation was trending towards the single-digit target.

The CBN kept its main lending rate unchanged for the second time at a record high of 12 percent last month after six increases last year to help offset a decline in the Naira and rising prices.

The inflation rate accelerated to 12.6 percent last month from 10.3 percent in December after the government partially removed fuel subsidies.