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UPDATE 2-Nigeria central bank still "very independent" -new governor
June 11, 2014 / 5:26 PM / in 3 years

UPDATE 2-Nigeria central bank still "very independent" -new governor

3 Min Read

* Governor says will operate without interference

* Reiterates aim is to bring down interest rates

* Will work to rebuild reserves - Emefiele (Recasts with comment on rates)

By Chijioke Ohuocha

LAGOS, June 11 (Reuters) - Nigeria's central bank remains "very independent," newly appointed governor Godwin Emefiele said on Wednesday, dismissing fears of government interference after the president ousted the previous governor in February.

Emefiele also told investors in a conference call the bank would aim to eventually bring down interest rates, holding to a stance that last week helped send the naira to its lowest in more than two months and sparked a sell-off in bonds.

Investors and analysts, worried by the suspension of widely respected former governor Lamido Sanusi, have fretted that the government may attempt to influence monetary policy before a national election next year in Africa's largest economy.

Sanusi, an outspoken critic of the government who regularly railed against its record on corruption, was a favourite of international investors. He was named the Emir of Kano on Sunday, making him one of the most influential leaders in the largely Muslim north of Nigeria.

"The MPC is very independent and there would not be any changes (to policy)," Emefiele said, referring to the bank's monetary policy committee.

"All decisions will be taken in line with economic fundamentals."

Emefiele, who took office last week, spooked investors on Thursday when he outlined his aim to spur lending by reducing interest rates - a stark contrast to Sanusi, who often suggested he had to maintain high rates because of reckless government spending, especially during election cycles.

Emefiele later told Reuters in an interview that he had no immediate plans to cut interest rates and that he would not consider it until after the presidential election in February 2015.

Still, analysts have said the mere mention of a desire to eventually cut rates, which have been stuck at 12 percent since 2011, sent a strong signal to the markets.

"We will try in the medium- and long-term to make sure that rates come down after we monitor the liquidity situation and market condition," Emefiele said on the conference call.

The naira has stabilised since last week's sell-off, partly owing to dollar sales by oil companies.

Emefiele also said he would work to rebuild foreign reserves. Nigeria had around $37 billion in reserves as of June 9, which can cover up to eight months of imports, he said.

He said the bank would ensure financial stability and and would not introduce regulations that would harm the profitability of lenders. (Editing by David Dolan/Ruth Pitchford)

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