Nigeria’s central bank keeps rates unchanged, signals continuing insecurity

Central Bank of Nigeria Governor Godwin Emefiele briefed the media at the MPC meeting in Abuja, Nigeria on January 24, 2020. REUTERS / Afolabi Sotunde

ABUJA, Nov. 23 (Reuters) – Nigeria’s central bank kept its policy rate unchanged at 11.5% for the seventh time in a row on Tuesday, but cited continued insecurity in much of the country as a major risk to the country. recovery of Africa’s largest economy.

Governor Godwin Emefiele said the decision to keep rates stable was unanimously supported by members of the Monetary Policy Committee (MPC).

“MPC believes that the current political position has supported the resumption of growth and should be allowed to continue a little longer,” Emefiele said.

Nigeria’s economic rebound, after a COVID-19-induced recession in 2020, was driven by fiscal and monetary interventions, he said.

Africa’s largest economy grew just over 4% in the third quarter, its fourth consecutive quarterly increase.

However, the security situation in Nigeria was hampering business confidence and foreign investor sentiment, Emefiele said.

Nigeria is grappling with an Islamist insurgency in the northeast and a spate of kidnappings for ransom in the north and northwest.

“The persistence of insecurity (…) remains a major risk for our recovery. The committee calls on the country’s security agencies to increase their presence in order to strengthen total confidence and the flow of people, goods and services across the country, “Emefiele said.

Nigeria was struggling with weak growth before the COVID-19 pandemic triggered a recession and created large funding gaps, including dollar shortages and inflation.

Few expected the central bank to change interest rates after lowering them a year ago.

Virág Fórizs, emerging markets economist at Capital Economics, said that “the central bank’s arguments for tightening monetary policy have weakened with falling inflation in recent months, especially as the rebound in the economic activity seems to be waning “.

On Tuesday, the World Bank called for a tightening of monetary policy to attract private investment, citing that the naira’s black market premium was fueling inflation, in addition to central bank financing of the government deficit.

Reporting by Chijioke Ohuocha, written by MacDonald Dzirutwe; Editing by Kevin Liffey and Raissa Kasolowsky

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