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CHUKWUMAH KELECHUKWU
Central Bank of Nigeria (CBN) Monetary Policy Committee, has retained benchmark interest rates at 13.5 per cent.
Rising from its bimonthly MPC meeting on Tuesday, July 23, 2019 the CBN Governor, Mr Godwin Emefiele, announced the decision of the committee at the end of a two-day meeting held at the apex bank’s headquarters in Abuja.
According to Emefiele, all the 11 members that attended the two-day meeting voted to retain the current monetary policy stance.
Thus, apart from the MPR which the committee retained at 13.5 per cent, it also decided to hold the Cash Reserves Ratio (CRR) at 22.5 per cent, and the Liquidity Ratio at 30 per cent. The Asymmetric Window was also left at +200 and -500 basis points around the MPR.
Emefiele explained that in considering specific policy options of whether to loosen, tighten or hold, the committee ensured that it focused and considered the growth of the economy was imperative and the management of price stability was sacrosanct. He disclosed that after evaluating the consequences of loosening or tightening options, the committee decided to hold on its monetary policy’s position.
According to him, tightening policy is not an option at this time, while loosening will increase money supply and stimulate aggregate demand as domestic production and economy will be awashed with liquidity. The governor added that holding on to current monetary policy’s position, the committee observed that the recent action of the management of the bank targeted at stimulating credit growth in the real sector would increase credit delivery to the real sector.
He said holding on to its monetary policy would also accelerate development and economic growth in the country.
The CBN governor said that another reason was that interest rates were currently trending downward and it was safer to await the full impact of this policy action on the economy before reviewing its position.
Emefiele said that the MPC also called on the banks to encourage Nigerians in diaspora to use official sources for remittance of funds. He said the committee advised the banks to introduce incentives by reducing charges on diaspora home remittances to Nigeria.
BADEJO ADEMUYIWA has 23 years experience as a Finance Writer, specialising in Insurance and Investigative Reporting.
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