MPC Retains Interest Rate At 11.5%
For the fifth consecutive time, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) ended its meeting retaining the Monetary Policy Ratio (MPR) at 11.5 percent.
The Committee at its Tuesday meeting held all the parameters constant leaving the Cash Reserve Ratio (CRR) at 27.5 per cent, the Liquidity Ratio at 30 per cent and the Asymmetric Corridor at plus 100 and minus 700 basis points around the MPR.
The decision according to the CBN Governor, Godwin Emefiele was prompted by foreign and local development, stating that “It was either we aggressively address the high inflationary pressure or continue to pursue measures aimed at supporting recovery.
“The committee remains overwhelmingly committed to supporting efforts of the Federal Government in ensuring full restoration of the productive capacity of the Nigerian economy.
The Members favoured achieving price stability in the short to medium term and hence, retained its policy bearing in mind that a drastic change could create more challenge for the Nigerian economy.
“The MPC noted that economic growth could be hampered in an environment of unstable prices,” Emefiele said.
He said the choice was between loosening the stance of policy to further ease credit or hoping to moderate price development.
“There was also the option or maintaining the old stance in order to allow the previous policy measures to continue to permeate the economy while observing global and domestic developments.
“Committee noted that an expansionary stance of policy could transmit to reduce pricing of the loan portfolio of deposit money banks and result, therefore, in cheaper credit to the real sector of the economy.
“On the converse, these expected transmissions may be constrained by security challenges and infrastructure deficits, which can only be addressed by policies outside the purview of the CBN.
“Based on the above considerations, the MPC made the decision to hold all policy parameters constant,” the CBN governor said.
He called on the Federal Government to decisively address lingering security challenges across the country to accelerate growth in the agricultural sector, boost economic diversification and food security.
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