The Central Bank of Nigeria is more likely to tighten monetary policy than ease it in the months ahead, the Governor, CBN, Mr. Lamido Sanusi, has said.

“We’re likely to remain where we are but if we’re going to move at all, we’re more likely to tighten than to ease,” Bloomberg quoted Sanusi as telling journalists in Paris on Monday.

“I would advise against a precipitate easing only to turn around after a few months and tighten,” the CBN governor stated.

Sanusi said inflation was under control and the naira had held up well relative to other emerging market currencies.

The Monetary Policy Committee had kept the policy rate at a record high 12 per cent for a 12th consecutive meeting on September 24.

Inflation eased to 8.2 per cent in August from 8.7 per cent in the previous month, staying within the central bank’s target of less than 10 per cent.

The naira has weakened 2.6 per cent against the dollar this year and may come under more pressure as President Goodluck Jonathan estimates a 12 per cent drop in oil and gas revenue in 2014.

Sanusi said last month that the bank was committed to using its currency reserves to support the naira.

The central bank sells foreign currencies at twice-weekly auctions to keep the naira within a range of three percentage points around 160 a dollar.

“Inflation should be down to under eight per cent by December. The exchange rate has remained fairly stable, it’s pushing the band but it’s not lost anything near what we saw in India, South Africa or Ghana, so we’ve done very well on that score,” Sanusi said.

Meanwhile, the Deputy Governor, Financial System Stability, CBN, Dr. Kingsley Moghalu, has denied reports that the nation’s economy is weak.

Moghalu, who delivered a lecture entitled, “The Human Capital Dimension of Economic Transformation,” at the University of Nigeria, Nsukka, to mark the golden jubilee celebration of the first graduates of the university, was quoted in media reports on Monday as saying the economy was weak.

A statement by the Director, Corporate Communications, CBN, Mr. Ugo Okoroafor, said the deputy governor only gave a contextual background on the Nigerian economy and the quest of Nigeria to become one of the top 20 economies in the world by the year 2020.

In that context, the CBN spokesman said Moghalu had noted that Nigeria’s economy had historically not performed up to its full potential, relative to the country’s endowments and the achievements of emerging market economies such as those of China, Brazil, Malaysia and South Korea, some of which were at a similar level of development with Nigeria in the 1960s.

Source: Punch