Headline inflation has moderated from 15 per cent to 14.7 per cent in August.

With the prevailing inflation pressures on the economy during the first half of 2012, the Central Bank of Nigeria, CBN, on Tuesday resolved to keep Monetary Policy Rate, MPR, at the 12 per cent it announced for the previous month.

The CBN governor, Lamido Sanusi, said at the end of the Monetary Policy Committee, MPC, meeting in Abuja, that year-on-year headline inflation declined to 11.7 per cent in August 2012, from 12.8 per cent in July, while core inflation dropped to 14.7 from 15 per cent during the same period.

With that, he said, members of the MPC unanimously voted in favour of retaining the MPR, which currently stands at 12 per cent, along with +/-200 basis points corridor. The committee also resolved to keep the Cash Reserve Requirement, CRR, at 12 per cent, and the Net Open Position, NOP, at one per cent.

Given the unpredictability of food prices, the apex bank’s governor said there is a need to watch the inflationary trend as the year comes to an end, before altering the present monetary stance.

According to him, the external reserves which stood at about $37.16billion last July, has climbed above the $40 billion mark, while a recent National Bureau of Statistics, NBS, report showed that Real Gross Domestic Product, GDP, grew by 6.28 per cent on an aggregate basis in the second quarter of 2012, despite recent disruptive security situation in the country and depressive performances of major economies in Europe, Asia and America.

The committee noted that the decisions it took at the July meeting were beginning to yield positive results, as the country’s reserve level is growing, while inflation trend is going down and exchange rate is stable.

He commended the Federal Government on the improvement in electricity supply witnessed in recent times, saying the progress recorded in the privatization programme, prudent fiscal stance and sustained fraud investigation in the petroleum subsidy regime is encouraging.

On the crisis in the global economic system, Mr. Sanusi said developments in the global and domestic economy and the financial markets has created the need for sustained fiscal consolidation, adding that the crisis calls “for cautious optimism by policymakers”.

The Committee listed some of the key policy steps needed to stabilize the economy as protection of the domestic economy and building external reserves buffer; risk of potential large inflow of “hot money” resulting from further monetary easing in the US and Europe; and improved yield on fixed income instruments amongst others.

The CBN boss said the apex bank is closely monitoring the level of hot money, such that the past experience of capital outflow in the event of shock does not have much impact.