ABUJA—Resuming for its first meeting for fiscal 2019, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday, again, left the Monetary Policy Rate (MPR) untouched at 14%, alongside all other policy parameters.
The MPC decided by a vote of all eleven (11) members to retain the MPR at 14 per cent; the asymmetric corridor of +200/-500 basis points around the MPR; the CRR at 22.5 per cent; and the Liquidity Ratio at 30 per cent.
The CBN Governor, Mr. Godwin Emefiele, who made this announcement while briefing Journalists in Abuja, stated that the Committee was of the opinion that loosening option was very remote, and also felt that tightening would dampen investments and hamper improvements in output growth, given the already fragile growth performance so far achieved.
“In the light of the observed risk confronting the economy, including the global and domestic inflationary pressures, which have intensified the risk of currency depreciation, the MPC was of the view that a loosening option was very remote.
“Weighing the balance of its judgement on price stability conducive to growth, the MPC felt that tightening would result in the loss of the gains so far achieved, noting that this may drive the banks to reprice their assets; thus increasing the cost of credit as well as elevating credit risk in the economy. It will also worsen the position of non-performing loans of the banks”, he remarked.
Furthermore, the CBN Governor disclosed that the Committee noted with satisfaction the gradual reduction in Non- Performing Loans of the deposit money banks (DMBs), which he said has further strengthened their balance sheets.
He added that the Committee believes that as Government pays off contractor debt and other obligations, there will be a sizable reduction in the NPLs of the banking system.
While urging the authorities to expedite action in broadening the base of the Value Added Tax (VAT), the MPC argued that increased tax collection will reduce the pressure on government expenditure and create fiscal buffers to improve macroeconomic management.
Also, the Committee commended the government’s focused expenditure on investment in infrastructure and urged the Federal Government to sustain the pace towards addressing the infrastructural deficit in Nigeria.
Recall that MPR has remained unchanged since July 2016 when the MPC voted to retain all policy parameters at their current levels, a decision that has since maintained status quo.
