Nigeria’s central bank kept its main interest rate at 14 percent on Tuesday, delaying a cut expected by some economists on the back of slowing inflation rates.
“The objective of the policy stance will be to accelerate the reduction in the rate of inflation to single digits, promote economic stability, boost investor confidence and promote foreign capital flows,” bank governor Godwin Emefiele said.
Nigeria’s benchmark rate has been held at 14 percent for almost two years, since inflation rates spiked and the naira devalued sharply with the country mired in its first recession for a quarter of a century.
However, Nigeria climbed out of recession last year and inflation has steadily decelerated, though that has largely been due to a recovery in crude production and a rebound in global oil prices.
On Monday, Nigerian statistics office data showed economic growth slowed in the first quarter of 2018, the first time since the country pulled out of recession last year.
That comes as President Muhammadu Buhari, elected in 2015 partly on promises to restore the Nigerian economy, seeks a second term in the February 2019 vote.
The central bank governor said one reason rates were held was that inflation, still above the central bank’s single-digit target, could worsen again after an influx of cash from the implementation of Nigeria’s much-delayed 2018 budget.
Similarly, heavy spending during election season could also spark a jump in inflation, Emefiele said.
Last week, the statistics office said inflation in April stood at 12.48 percent, its 15th monthly decline.