CBN targets lower inflation rate

"This is good news for the economy but its success is hinged on the success of the 2015 elections."

The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, has lowered the nation’s inflation target band for next year to six per cent to nine per cent.

According to a Bloomberg report, the bank ideally wants to reduce the target range to five per cent to eight per cent in 2015 and then three per cent to six per cent the year after that.

Sanusi, however, said in an interview in Oslo, where he was attending a Norway-Africa business conference, that the timing and success of this was being complicated by the elections due to hold in 2015.

“There is a general sense now that the central bank has established its credibility as a price stability central bank. We have been able to anchor expectations and we can anchor them better,” he said.

Policy makers have kept the benchmark interest rate unchanged at 12 per cent since November 2011 to support the currency of Africa’s largest oil producer and meet a target of keeping inflation under 10 per cent. Consumer prices rose eight per cent in September compared with a year earlier.

Sanusi, 52, said he would not seek to renew his term when it expires in June, noting, however, that having the right balance in leadership at the CBN was more important than whether his successor was an external or internal appointment.

Ensuring the governor and the four deputies are able to manage the various mandates of the central bank is key, according to him.

“It could be from within or outside, it doesn’t really matter. What’s important is the institution and to have the right balance,” he stated.

According to the Bloomberg report, the CBN governor helped to clean up the banking industry during a debt crisis in 2009 and has left interest rates at a record high for almost two years to bolster the currency and keep inflation under control.

Vetiva Capital Management Limited, a brokerage based in Lagos, said the four deputy central bank governors and the Chief Executive Officer of Access Bank Plc, Mr. Aigboje Aig-Imoukhuede, were the front-runner candidates to succeed Sanusi.

The governor’s current deputies are Sarah Alade, Suleiman Barau, Tunde Lemo and Kingsley Moghalu.

“If you have someone, say, with a strong economic theoretical background, you need to make sure at the deputy governor level you’ve got strong banking supervisory, regulatory oversight background. If it’s a banker that’s more into operations and financial stability, then you make sure that you’ve got enough economists to complement it. It’s very collegial,” Sanusi said.

The governor said he informed President Goodluck Jonathan in 2011, two years after his appointment that he would leave at the end of his term.

According to him, he plans to notify Jonathan in writing about three months before he leaves and the President will then be free to announce his successor.