Yemisi Izuora
The Central Bank of Nigeria has raised its benchmark interest rate by 1 percentage point.
The Monetary Policy Committee increased its main rate to 12 percent Governor Godwin Emefiele said in Abuja.
The committee noted that rising food and power costs have boosted inflation since then to 11.4 percent in February, exceeding the bank’s 6 percent to 9 percent target range.
The cash-reserve ratio was raised to 22.5 percent from 20 percent. In November, the rate was lowered by 5 percentage points.
“The balance of risks has shifted against price stability,” the governor said.
Emefiele tightened policy in the face of a slowing economy and as he complained that banks aren’t extending enough credit to investors to spur growth. The economy expanded 2.8 percent in 2015, according to the statistics office, the slowest pace since 1999.
The central bank has tried to keep the naira and inflation stable by restricting foreign-exchange supply.
The policy, which is backed by President Muhammadu Buhari, has led to the naira being pegged at 197 to 199 per dollar since last year.
The currency is trading at about 320 per dollar on the black market.
Emefiele urged Nigerians to shun imported goods for local ones, saying that would ease pressure on the naira.
The committee reiterated its commitment to price stability across the range of consumer prices, exchange rate and across interest rate, which is fundamental to reviving economic growth and employment generation.
Also, the bank would continue to leverage its development finance policy to support critical sectors of the economy.
The MPC further stressed the need to sustain, deepen and speed up reforms designed to ensure focused coordination of monetary and fiscal policies.