Nnanna: MPC will raise interest rate if inflationary pressures build up before 2019 polls


    MPC wants to ensure interest rate stays above inflation
    Deputy governor sees scope to raise rates before February vote

    The Nigerian central bank is “in the mood” for tightening and will increase its main interest rate if inflation doesn’t slow, Deputy Governor Joseph Nnanna said.

    “Every member of the Monetary Policy Committee is certain that the monetary policy rate should increase if inflationary pressures build up,” Nnanna said Monday, speaking on the sidelines of a conference in the resort city of Sharm El-Sheikh in Egypt. “Our intention is to ensure that the interest rate is kept positive in real terms.”

    The MPC has held its key rate at a record 14 percent since 2016 in a bid to prop up the naira and tame inflation after it spiked to double digits in the same year. While price growth has since slowed to below the monetary policy rate, the panel has shifted from some members voting for rate cuts in January to three of ten members favoring higher rates at the July meeting.

    Governor Godwin Emefiele flagged the delayed passage of the record 2018 budget of 9.12 trillion naira ($25 billion) and pre-election spending as possible price risks in the second half of the year. Nigerians will go to the polls in February for a vote in which President Muhammadu Buhari will seek a another term.
    Right Signal

    “These factors would warrant a rate increase to send the right signal to the public, that the central bank will tighten policy to respond to higher inflation,” Nnanna said. “There’s a scope to raise rates before the elections in February.”

    Nnanna voted for a 50 basis-point increase in May. While the individual member statements from the July MPC meeting haven’t been released, one person voted for 25 basis-point hike and two wanted to raise the rate by 50 basis points.

    See how the Nigerian MPC’s vote has changed since January

    “The central bank is still in the mood for tightening,” he said. “How fast are we going to tighten is what members haven’t agreed upon.”

    While policy tightening by the U.S. Federal Reserve is a concern, investors still see Nigeria as an attractive market thanks to the stable naira and the yield curve on fixed-income instruments that’s higher than in the U.S. or Europe, Nnanna said.

    “I am not worried about reversal of capital flows,” he said. “If any investor wants to exit the market, we shall meet them at the door and write a check and give them their money.”

    — With assistance by David Malingha Doya

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    Samson Gbenga Salau [Editorial Board Adviser] Gbenga Samuel Salau is a professional journalist with over 17 years experience in journalism, he is a graduate of Communication and Language Arts, University of Ibadan. On completion of his youth service, he joined The Guardian as a freelance journalist and was later absorbed as a staff. While in the University, he was a campus journalist reporting for the Independence Hall and Faculty of Arts Press Clubs. As a campus journalist, he won the following awards; Independence Hall Press Best News writer; University of Ibadan Union of Campus Journalists’ Best News Reporter/Writer; First Runner-up, Reuben Abati Award for Investigative Journalism; Association of Faculty of Arts Students’ Press Best Reporter; University of Ibadan Union of Campus Journalists’ Best Political Writer; Winner, Reuben Abati Award for Investigative Journalism, and University of Ibadan Union of Campus Journalists’ Best Interviewer. He served the Association of Communication and Language Arts Students, as the Public Relation Officer, the same year he was appointed the News Editor of the Association of Faculty of Arts Students Press. The following session, he was made the General Editor, and a member of the 13-man University of Ibadan Students’ Union Transition Committee. As a reporter in The Guardian, in 2014, he won the Promasidor Quill Award Best Report on Nutrition and DAME Business Reporting category. In the 2015 edition of the Promasidor Quill Award, he won the best Report on Nutrition and Brand Advocate Categories, while in 2016, he won the NMMA Print Journalist of the Year, first runner-up Golden Pen Reporter of the Year and SERAs CSR Awards. Gbenga Salau loves traveling, reading, and listening to songs with good lyrics no matter the genre.


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