ABUJA, March 19 (Xinhua) -- The Nigerian government on Tuesday retained the country's lending rate at 12 percent.
Governor of the Central Bank Governor Sanusi Lamido Sanusi made the announcement in Abuja after the bank's Monetary Policy Committee meeting.
This is the ninth time the committee had maintained the rate at 12 percent considering the inflation rates and other macro- economic indicators.
Sanusi said the committee took the decision after careful deliberations on the major three options it had.
"The committee was faced with three options; the first was increase in rates in response to optic and headline, food inflation and pressure on exchange rate," he added.
"Second, a reduction in rate in view of declining core inflation and GPD growth and third retaining current monetary policy stance to sustain the gains of monetary policy while utilizing the existing space in the corridor to influence yokes and exchange rates in the short term," he said. According to him, the committee considered and rejected option one as being unnecessary since there are no major inflationary concerns.
"While acknowledging the merit of argument in favor of option two, it was also rejected by the majority because it could send a wrong signal of premature termination of an appropriately tight monetary policy stance," the apex bank chief told reporters.
The CBN governor said the committee was satisfied with the macro-economic stability in spite shocks from external and domestic economic environment.
He said the committee noted that the core inflation at 9.0 percent and 9.05 percent in January and February and the price data could send a signal of upside risk to inflation in the medium term. He said the committee was of the view that growth in the domestic capital market was given by huge capital flows.
Sanusi said risk to economic stability in the medium to long term could be addressed by diligent implementation of sound polices of fiscal consolidation and structural reforms.
He said low lending rate could be achieved if the necessary infrastructures like good roads networks were put in place.
On the 2013 appropriation, Sanusi said the oil benchmark of 79 U.S. dollars per barrel might slow down the pace of fiscal consolidation.
He said committee, however, expressed satisfaction with the significant accretion to external reserves which stood at 49.38 billion dollars on March 14.
Sanusi said the reserves level could finance 13 months of imports, adding that the committee, however, advised the apex bank to sustain its monitoring of portfolio and foreign direct investment flow.