Nigeria’s inflation rate may not rise as high as the central bank previously forecast after the government removed part of a subsidy on gasoline in January, Governor Lamido Sanusi said.
Inflation in Africa’s top oil producer may peak this month or in September before declining toward the end of the year, he told reporters today in Abuja, the capital. The Central Bank of Nigeria had previously forecast that price growth would accelerate to as fast as 14.5 percent in the third quarter.
Data earlier this month showed inflation was little changed at 12.8 percent in July. The median estimate in a Bloomberg News survey was for inflation to accelerate to 13.9 percent. The central bank has kept its policy rate unchanged at a record 12 percent this year, after raising it by 5.75 percentage points in 2011 to curb price pressures.
“The tightening of monetary policy has been very effective in terms of keeping the exchange rate fairly within the band,” which damps the impact of imported inflation, Sanusi said. The bank sells foreign currency at a biweekly auction to keep the naira within a 3 percent band around 155 per dollar.
Nigeria’s foreign-currency reserves have reached more than $40 billion “for the first time in a long time,” Sanusi said. “We hope if we can build up the reserves, maintain a fairly stable exchange rate, and we see inflation come down, then we can look at the situation in the next 2-4 months.”
Separately, the central bank will issue a 5,000-naira note ($31.60) by early 2013 after a review of the currency structure, Sanusi said. Currently the highest note is a 1,000-naira bill. The smallest six denominations, up to 20 naira, will be in coins, while the largest six, 50 naira to 5,000 naira, will be in notes, he said.
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