Central Bank of Nigeria Lifts Rate 75bps to 8.75%

The Central Bank of Nigeria increased its monetary policy interest rate by 75 basis points to 8.75% from 8.00% previously.  The Bank also increased the key borrowing and lending rates by 75bps to 6.75% and 10.75% respectively.  Bank Governor, Lamido Sansui, said: "The inflation outlook appears uncertain owing to the expected implementation of the new national minimum wage policy and the imminent deregulation of petroleum products," and that there is "the need for pursuing policies to foster macro- economic stability, economic diversification as well as encouraging foreign capital inflows".

Previously the Nigerian central bank increased the monetary policy rate by 50bps to 8.00% at its May meeting this year.  Nigeria reported annual headline inflation of 10.2% in June, compared to 12.4% in May, 11.3% in April, and 12.8% in March, and above the Bank's inflation target of 10%.  The Nigerian government has been reported as planning to double the minimum wage to 18,000 Naira next month.  Nigeria reported annual GDP growth of 6.64% in the March quarter, while the Bank is forecasting 2011 growth of 7.8%.

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