The Monetary Policy Committee (MPC) has retained the Monetary Policy Rate at 14 per cent to combat inflation due to foreseen increase in global and domestic risk to the country’s economy.
The Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, said this when he briefed newsmen in Abuja, yesterday on the outcome of the first Monetary Policy Committee meeting for the year.
Emefiele said all 11 members were present at the meeting and they all voted to retain the MPR, which was last changed in July 2016.
The Cash Reserves Ratio (CRR) also remained unchanged at 22.5 per cent, liquidity at 30 per cent and Asymmetric corridor at +200 and -500 basis points around the MPR.
Giving an insight to what informed the committee’s decisions, Emefiele said concerns were raised on the impact of the continued trade tension between United States of America and China, as well as the Brexit situation in Europe.
On the domestic risk to growth, he mentioned the persistent security challenge in the North East, the herdsmen attack in other regions and perceived political risk due to the upcoming general elections.
The CBN boss said “in the light of the concerned risk confronting the economy, including the global and domestic inflationary measure which has intensified the risk of currency depreciation, the MPC is of the view that a loosening option is very remote.
“The MPC also felt that tightening will result in the loss of the gains so far achieved and may drive banks to reprise assets, thus increasing the cost of credit, as well as elevating credit risk in the economy.
“It will also worsen non-performing loans in banks.
“The committee also felt that tightening will dampen investment and hamper improvement in output growth, given the already fragile growth performance so far achieved.
“In the light of the factors, the committee decided to keep the policy parameters unchanged from their current levels by a vote of all 11 members.”