$79 per barrel oil price may pose risk to inflation objectives - Sanusi
The Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi, has said that the 79 dollar per barrel oil price benchmark used for the 2013 budget may pose risk to inflation objectives.
Sanusi made the observation in Abuja on Monday while briefing newsmen on the outcome of the Monetary Policy Committee (MPC) meeting.
The governor, who chaired the meeting, said that the oil benchmark for the 2013 budget was increased from 75 dollars to 79 dollars per barrel.
``This may therefore constitute a pressure point for the low inflation objective and effective monetary policy as a whole in 2013.’’
Sanusi reaffirmed the commitment of the committee to respond appropriately if public spending in 2013 adds up to inflationary pressure.
He said that considering the stability achieved in 2012 with average year-on-year headline inflation rate at 12.24 per cent, retaining the MPR at 12 per cent was the right option.
``The committee considered the call for the reduction in the MPR because of the inflation outlook; however, the outlook may be undermined by increased sub-national government spending and Federal Government expenditure in 2013.
``In view of the foregoing, the committee decided that it was prudent to hold and monitor development between now and next meeting of the MPC.
``The committee therefore decided by a vote of a majority of eight to two to maintain the current policy stance that is to retain MPR at 12 per cent with corridor of plus or minus 200 basis point around the midpoint.’’
Sanusi added that the committee retained the Cash Reserved Ratio (CRR) at 12 per cent and the Liquidity Ratio at 30 per cent, adding that two members voted for reduction of MPR by 25 per cent.
The seventh time the committee has retained the lending rate at 12 per cent owning to the fact that it cannot be reduced with the current inflation rate in the country.
