Again, MPC Keeps Interest Rate At 14%
BY EDMOND ODOK, ABUJA – As expected, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has maintained an unchanged Monetary Policy Rate (MPR) at 14 per cent.
The CBN Governor, Mr Godwin Emefiele said the MPC agreed to maintain the status quo for the 10th successive sitting by eight votes to one that supported rates’ increase.
Rising from its two-day meeting in Abuja on Tuesday, Emefiele said the Committee took the decision after considering developments in the global and domestic economy since its last meeting in March 2019.
The meeting, MPC’s 261st session and its second this year after the Presidency versus Senate face-off over nominees, generally weighed developments on the domestic scene against sustained global growth momentum; lessening geo-political tensions, and unproblematic financial conditions in the eurozone, UK, and Japan among others.
Recalled that the MPC last hiked interest rates to combat rising inflation in July 2016 and Emefiele said aside retaining the MPR at 14 per cent, other decisions taken include: Cash Reserves Ratio (CRR) at 22.5 per cent; Liquidity Ratio (LR) at 30 per cent; and the Asymmetric Window left at +200 and -500 basis points around the MPR
Furthermore, the MPC noted that on the domestic front, there has was sustained drop in headline inflation rate in April at 12.5per cent y/y, rebounding crude oil prices and stable production; foreign exchange stability amid strong external reserves, and sustained Gross Domestic Product (GDP) growth.
Similarly, the MPC said going by recently released Q1-18 GDP numbers, there is worrying weakness in the domestic economy, and therefore restated the urgent need for reforms and fiscal stimulus.
On growth outlook, the MPC cited delays from the late passage of the 2018 budget; growing level of sovereign debt; and security challenges ravaging the agriculture sector among the existing and emerging challenges.
Private sector lending also attracted the MPC’s attention as members consider innovative ways by Deposit Money Banks (DMBs) to increasing lending to customers.
