- First ever in over 2years
BY COBHAM NSA, ABUJA – For the first time since July 2016, the Central Bank of Nigeria (CBN) on Tuesday lowered the Monetary Policy Rate (MPR) by 50 basis points from 14 per cent to 13.50 per cent.
Nigeria was already in recession when the apex bank’s Monetary Policy Committee (MPC) first set the 14 per cent baseline interest rate in 2016 to combat inflation and advance investor outlook for new capital inflow.
However, the MPC kept all other key parameters unchanged with Cash Reserve Requirement (CRR) at 22.5 per cent and the liquidity ratio at 30 per cent.
The CBN Governor, Mr Godwin Emefiele, said the development signals a new ‘pro-growth’ direction aimed at managing investors’ sentiments in terms of capital inflows.
Rising from the 226th MPC meeting at the CBN headquarters in Abuja, Mr Emefiele told journalists that the decision on rates reduction was based on the need to support and stimulate growth in various sectors of the economy at this time.
Though a pleasant surprise to many financial experts, who expected MPC’s continued retention of an unchanged MPR and other monetary policy variables, Emefiele said having attained sustainable level of stability in the macro-economic indices, the apex bank considers it imperative to exploit the next phase of growth consolidation in the economy.
He said; “Compared with where the country is today, with inflation at 11.3 per cent; foreign reserves close to $45 billion (with prospects of this continuing); exchange rate converging in the official and parallel markets between N358 and N360 to the dollar; gross domestic product (GDP) in positive trajectory consistently for about five to six quarters, one will agree there is relative stability in the economy.”
Consequently, the CBN Governor said; “Having seen MPR at 14 per cent since July 2016, and with relative stability in the macro-economic variables over the last two to two and a half years, the CBN believes the reduction in the lending rate should be the next phase we should begin to talk about consolidating the growth in the economy.”
He also explained that the development was meant to ease the unemployment rate and diversify the nation’s economy on a sustainable basis, adding that now is the time to talk about and focus on creating more jobs and reducing the level of unemployment in the country for the people.
“We will keep our eyes on all the key economic indicators and push harder on measures targeted at consolidating growth. The plan is to keep inflation at moderated level and the exchange rate stable going forward”, the governor said.
Insisting that the time has come to talk about diversification strategies for Nigeria’s economic base, Emefiele said the apex bank would constantly focus on the stability achieved so far in the macro-economic environment.
On the apex bank’s readiness in the face of any global economic shock, Emefiele said assuredly; “There is no monetary challenge that the CBN management and the MPC cannot surmount. Definitely, we will surmount them as they come.”
“Let me assure you that we will continue to do what we have been doing to keep our friends happy and the economy growing”, he said
