Nigerian Central Bank, Unable to Meet, Keeps Key Rate at 14%

(Bloomberg) -- The Central Bank of Nigeria won’t hold its rate-setting meeting scheduled for Monday and Tuesday because lawmakers have yet to approve monetary policy committee members, leaving the body unable to form a quorum.

The bank will “maintain key monetary policy variables” at levels decided in November, Governor Godwin Emefiele said in an emailed statement, effectively leaving the key interest rate at 14 percent.

Lawmakers have yet to approve the appointment by President Muhammadu Buhari of at least five new MPC members, which would have enabled a quorum, as required by law.

“We are not considering the confirmation” of the MPC members, Rafiu Ibrahim, the head of the senate banking committee, said Friday. “The senate has an issue with the executive. Anything to do with a confirmation will not be considered.”

Postponed by Weeks

Emefiele said last week he was “very hopeful” that the meeting would take place as scheduled but if it didn’t, it would be a matter of “a few weeks’ postponement.”

An emergency meeting is likely to be convened in February, ThisDay newspaper reported Monday, citing a person at the central bank that it didn’t identify.

The MPC has kept the key rate at a record-high 14 percent since July 2016, trying to balance attempts to bring down inflation with boosting an economy recovering from a slump last year.

“We are pleased that economic indicators continue to move in the right direction,” Emefiele said. “With modest recovery in oil prices and a boost in domestic production, we exited the recession in 2017 while inflation has continued its decline and is now at 15.37 percent,” he said.

July Cut

Nigeria’s inflation rate fell to 15.4 percent in December, the lowest since April 2016 and down from a record 18.7 percent in January last year. If the inflation rate slows to below 14 percent, the CBN could cut the key rate in July, Christian Orajekwe, head of research at Lagos-based Cordros Capital Ltd., said in an emailed response to questions.

Since the CBN was largely expected to keep its rates unchanged at this week’s meeting, the postponement “won’t change investors’ positioning in the market much,” Joe Delvaux, a money manager at Duet Asset Management Ltd. in London, said Friday, before it was confirmed that the MPC wouldn’t gather as planned.

“One could ask the question of how it is even possible to end up in a situation where the monetary policy of a country can’t be enacted due to too many MPC seats being empty,” he said.

The MPC currently meets six times a year, while the Central Bank Act requires the committee to gather only a minimum of four times annually. The CBN will issue a revised schedule of MPC meetings once it has met statutory requirements of membership and quorum, it said.

©2018 Bloomberg L.P.