THE Central Bank of Nigeria, CBN, has voted in favour of retaining its Monetary Policy Rate, MPR, at 14 per cent. Godwin Emiefele, the governor of the apex bank said after the Monetary Policy Committee, MPC, meeting in Abuja, that the recession would be over by the third quarter of this year due to the positive financial and economic indicators, which he said would endure.
“In consideration of the challenges weighing down the domestic economy and the uncertainty in the global environment, the Committee decided by a unanimous vote of eight members in attendance to retain the MPR at 14 per cent, alongside all other parameters,” explained Emefiele.
He added that the MPC decided to retain “MPR at 14 per cent. Retain Cash Reserve Ratio (CRR) at 22.5 per cent. Retain liquidity ratio at 30 per cent and Retain the asymmetric corridor at plus 200 and minus 500 basis points around the MPR.”
The Committee’s reluctance to alter the MPR in any fundamental manner, according to Emefiele, is largely due to the need to allow the existing policies to fully achieve their intended goals and objectives. He said the Committee noted that the cost of capital interest rate in the economy was high and that the trend was not helpful to growth.
On the financial stability outlook, Emiefele said the committee noted that in spite of the banking sector resilience, the weak macroeconomic environment had continued to exert pressure on the banking system, but however urged the Deposit Money Banks to intensify its surveillance in order to address emerging vulnerabilities.
That apex bank boss had a word for banks – to step up credit drive in the private sector to support the economic recovery, which would send positive feedback to the financial system. “My view is that with all the positive signs we see: inflation trending downwards, Gross Domestic Product improving to the extent that the negative growth rate has decelerated quite significantly, the fact that we have seen forex go to real sector and production capacities and industry capacities are beginning to improve, we have seen positive signs in various sectors of the economy, I am very confident that by the end of third quarter that we would be out of this and I still hold to that position,” said Emefiele.