By: BARBARA BAKO, Abuja.
The Monetary Policy Committee (MPC) has once again retained the Monetary Policy Rate at 14 per cent due to persistent uncertain economic conditions and high inflation.
The Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele on Tuesday said this while briefing newsmen on outcome of the Q2 MPC meeting for 2018 in Abuja.
Out of nine MPC members he said eight members unanimously voted to retain the existing MPR and one member voted for further tightening of the MPR.
This means that the Cash Reserve Ratio still remains 22.5 per cent, Liquidity Ratio, 30 per cent, the Asymmetric corridor is at +200 and -500 basis points around the MPR.
Emefiele said, “The currency swap deal is going to be positive for Nigeria, for Nigerian imports and also for Nigerians and we will ensure that we achieve that.
“It was a negotiation that was painstakingly done and am optimistic that Nigeria will reap the positive impact from this.
“We do expect that by the time the framework is released, Nigeria will end up being the Reminbi hub to West Africa sub-region because there are only three countries in Africa that currently enjoys the currency swap deal with China. They are South Africa, Egypt and Nigeria.
“We plan to release the framework for this by next week and the settlement banks have been chosen.
“The settlement banks would be Standard Chartered Bank and Stanbic Bank that has its own affiliate bank, that is Investment and Commercial Bank of China that would be the corresponding bank at the Chinese end.”
The governor also said the Committee disapproves of the low funding of the real sector by Deposit Money Banks and called on CBN to come up with initiative to channel funding to the sector.
He said in other to achieve this, the apex bank would soon come up with a guideline that would relate loan deposit ratio of banks with their level of cash reserves.
According to him, this would be used as a tool to compensate a bank that has done a lot of work in boosting it’s loan deposit ratio with Cash Reserves Ratio.
He explained that those banks that prefer to keep their liquidity in order to trade on government securities rather than lend to the real sector of the economy would be penalised.
“We will try as much as possible to come out with some Prudential’s that would relate loan deposit ratio with the level of cash reserves that the bank holds so as to direct a bank or compensate a bank that has done a lot of work in boosting it’s loan deposit ratio through compensating them with Cash Reserves Ratio and penalise those who prefer to keep liquidity and trade on government securities or direct those to the foreign exchange market rather than lend to the real sector.
“That framework will certainly come up and we have asked our relevant department to work on it and an optimistic that monetary policy committee will take that decision in the near term,” he added.
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