CBN Keeps Interest Rate At 11.5%, Eyes Inflation Drop In 2022

BY EDMOND ODOK – With eyes on the 2023 general elections, the Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR) at 11.5 per cent.

Rising from the MPC meeting in Abuja on Tuesday, CBN Governor Godwin Emefiele said members of the MPC unanimously agreed to retain the interest rate parameters after carefully balancing the benefits and the downside risks of its policy options.

According to Emefiele, “After a careful balancing of the benefits and the downside risks of the policy options, the MPC decided to hold all parameters constant, believing that a whole stance will enable the continuous permeation of current policy measures in supporting the recorded growth recovery and further boost production and productivity which will ultimately rein in inflation in the short to medium term.”

He told journalists that the MPC members unanimously voted to “retain MPR at 11.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 27.5 per cent; and retain the Liquidity Ratio at 30 per cent.”

“The MPC feels a hold will signal its realisation of the fragility of the growth recovery and its sensitivity to emerging global and domestic uncertainties. Hence, the need to sustain policy trajectory,” Emefiele said.

Also, the apex bank boss stated at the MPC meeting, the first for this year, that attempts by the United States to adopt the normalisation policy that returns to the pre-pandemic economic era would not pose any threat to Nigeria.

Emefiele further explained that money, particularly foreign exchange, expected to flow out of developing economies would not affect Nigeria since stimulus packages released by developed countries to stabilise their economy are not coming from the country.

On inflation, the CBN Governor said the MPC members are looking at further moderation of the figure going into the new year, noting that this would be driven by the significant interventions in the nation’s agricultural sector.

Similarly, the Committee noted that the Nigerian economy will hopefully continue with positive growth given the impressive headway made in the third quarter of 2021, which clearly indicated solid recovery from the recession.