-As MPC Retains MPR At 14 Per cent, Other Policy Parameters.
By Gift Samuel
Abuja-The Governor of the Central Bank(CBN) Godwin Emefiele has on Tuesday insisted that the country will come out of recession by the end of third quarter of 2017
The Governor who disclosed this while briefing newsmen at the end of the Monetary Policy Committee(MPC) meeting in Abuja, stressed that with the downward trend in inflation, negative growth deceleration in GDP as well as positive signs in various sectors of the economy, there is hope of Nigeria leaving recession in the third quarter.
Meanwhile, Emefiele noted that the Monetary Policy Committee (MPC) while expressing concern that loosening the monetary policy rate would exacerbate inflationary pressures and worsen the gains so far achieved in the exchange rate of the naira, decided to retain the MPR at 14 per cent;the CRR at 22.5 per cent; Liquidity Ratio at 30.00 per cent; and the Asymmetric corridor at +200 and -500 basis points around the MPR
He said the Committee noted that the cost of capital in the economy remains high and not helpful to growth, adding that it was also convinced that loosening would further increase the negative real interest rate as the gap between the nominal interest rate and inflation widens.
Emefiele said, “The MPC however, noted that further tightening would widen the income gap, depress aggregate consumption and adversely affect credit to the real sector of the economy.
“Committee urged the fiscal authorities to expeditiously commence the implementation of the recently approved
2017 budget, especially, the capital expenditure portion, in order to sustain the momentum of recovery, engender employment and restore confidence in the Nigerian economy” he said.
The CBN helmsman also stressed that the CBN interventions would be more vigorous and intense to underscore the Bank’s determination to ensure that forex is made available to all sectors to conduct business which will help for economic recovery.
According to him, “My view is that with all the positive signs we have seen, inflation trending downward, GDP I would say improving to the extent that the negative growth rate has decelerated, I would say quite significantly. The fact that we have seen forex go to real sector and production capacities are beginning to improve, we have seen positive signs in various economic sectors of the economy, I am relative and very confident that by the end of the third quarter that we would be out of recession and I still hold that position”.
While speaking on reduction in interest rate,he said that the economic aggregate present today does not signal a further downward trend in interest rate,adding that further decline of inflation and sustenance of FX intervention and convergence would need to take place before interest rate can slide downward.
Data from the National Bureau of Statistics (NBS) showed that the economy contracted marginally by 0.52 per cent in Q1 2017, a much more positive development since Q1 2016.The data also shows that about eighteen (18) economic activities recorded positive growth in Q1 2017; indicating that the economy was firmly on the path of recovery.