Nigeria's central bank left its monetary policy rate steady at 14.0 percent, as expected, saying loosening its policy could lead to a fall in the exchange rate of the Naira while tightening policy would result in a loss of the gains achieved in lowering inflation, raise the cost of credit, dampen investments and hamper improvements in output at a time of fragile economic growth.
The Central Bank of Nigeria (CBN), which has maintained its rate since July 2016, noted the continued economic recovery following the 2016 recession, despite persistent attacks on farmers by herdsmen, cattle rustling and flooding, and output should expand further in the fourth quarter of last year after gross domestic product grew 1.81 percent year-on-year in the third quarter.
However, CBN cautioned the outlook for growth remains fragile, with possible external shocks to the global economy from ongoing trade tensions between the U.S. and its key allies, slower growth in China, the uncertain direction of Brexit and monetary policy normalization in some advanced economies.
CBN forecast 2019 growth of 2.28 percent, in line with the International Monetary Fund's 2.0 percent forecast, and expects oil prices to remain relatively stable in light of OPEC output cuts.
Although the CBN noted a gradual rise in inflationary pressures, it said this was due to seasonal factors that mainly impacted food and as a result monthly inflation rates declined,.
In December Nigeria's headline inflation rate rose to 11.44 percent in December from 11.28 percent in November but on a monthly basis inflation only rose 0.74 percent from 0.84 percent.
