ABUJA Oct 3 Nigeria's central bank will pursue
price stability as an anchor for economic growth and attract
foreign investors as the country battles recession and rising
inflation, its governor said in a magazine interview.
In September the bank left its benchmark rate at 14 percent,
resisting calls from the finance minister to lower borrowing
costs to help the government borrow more domestically without
increasing its debt servicing costs.
It has said it will keep interest rates tight to attract
foreign currency and resolve a chronic dollar shortage brought
on by a slump in oil prices.
"The central bank does not reckon that curbing inflation,
attracting foreign investors and supporting growth are mutually
exclusive objectives," Governor Godwin Emefiele told The Banker
magazine, in the interview published on Saturday.
"The bank will continue to ensure that its decisions not
only consider price and financial system stability, but also
issues of employment and growth."
The central bank has said policymakers will need to act
together on fiscal, monetary and trade policies to jump start
growth, and that interest rate cuts alone will not help pull
Nigeria out of its first recession in 20 years.
Past rate cuts have not spurred credit growth as the banking
system did not respond to the move, the bank said.
Rising inflation - which hit a more than an 11-year high of
17.6 percent in August - was not due to excess money supply but
was the result of government policies that included a hike to
electricity tariffs and fuel prices and a currency floatation
which meant the naira fell 30 percent in one day.
Nigeria's National Economic Council, composed of former
presidents and state governors, has urged the central bank to
introduce "special monetary policy dictated by consumer price
and exchange rate".
Emefiele said he was optimistic about the economy despite
the headwinds. The government has tripled spending on
infrastructure in this year's budget while widening the tax base
to generate income. However securing foreign loans to support
the budget will be key, he told The Banker.
The African Development Bank's (AfDB) board will this month
consider approving a first, $1 billion, loan to Nigeria to cover
this year's budget deficit, its president, Akinwumi Adesina,
said last week.
(Reporting by Chijioke Ohuocha; Editing by Robin Pomeroy)