Nigeria will keep its key interest rate on hold at 12 percent at its first rate setting meeting of the year on Tuesday, as it considers the inflation effect of a removal of subsidy from fuel and the naira stabilises, a Reuters poll showed on Friday.

All but one out of nine analysts polled expect the Monetary Policy Committee (MPC) to keep rates unchanged. Analysts at Renaissance Capital forecasted a 50 basis point hike to 12.50 percent.

Sanusi said on Thursday the bank will not raise interest rates as a result of first-round inflation effects from the removal of a fuel subsidy but that rates may rise this year if government pushes ahead with a loose budget.

“We expect the central bank to keep the monetary policy rate (interest rate) unchanged at 12 percent,” Samir Gadio, emerging market strategist at Standard Bank wrote in a note to clients, adding that the stabilisation of the naira will support a neutral interest rate decision for now.

The naira has been strengthening in recent weeks. The unit firmed to a 3-week high against the US dollar this week after oil companies sold the greenback to support the local currency.

In January, Nigeria partly removed subsidies for fuel, increasing the price of petrol by 50 percent to 97 naira ($0.60) from 67 naira, which could have an inflationary impact by pushing up the cost of transport, food and other goods.

Sanusi told Reuters inflation could hit 14-15 percent this year, up from 10.3 percent in December, before falling to single digits in late 2013. He said inflationary impact of the subsidy removal in January could be a “bit exaggerated”.

Nigeria's Senate last week said it wants to adopt a $75 per barrel oil price benchmark in the 2012 budget, up from $70 proposed by the finance ministry which will give more money to government to spend and leave less for savings.

“The monetary authorities will have a close watch on the fiscal stance to monitor the level of consolidation, a phenomenon which may dictate the tune of monetary policy in the near term,” said Adedayo Idowu, economist at Lagos-based Investment firm Vetiva Capital. - Reuters