By Gift Olivia Samuel, The Sight News
In its last Monetary Policy Committee (MPC) meeting for 2018, the Central Bank of Nigeria(CBN), has again retained interest rates at 14 percent.
The Monetary Policy Rate (MPR), had been retained at 14 percent since the beginning of the year and has remained unchanged, despite votes from some of the Committee members to either loosen or tighten at different meetings.
The CBN Governor, Godwin Emefiele while addressing the press after the MPC meeting, stated that the MPC decided by a vote of all eleven (11) members present to HOLD, which led to the apex Bank retaining 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.
Emefiele, stated that the Committee believes that loosening will reverse more rapidly, the gains of price and exchange rate stability achieved so far given the liquidity impact that would entail.
He further said that the ensuing liquidity will exert pressure on the exchange rate in the light of increased capital flow reversals arising from monetary policy normalisation by the US Fed, adding that it would further depress the capital market.
In the aspect of tightening, he explained that the MPC is of the view that, while tightening will strengthen the stability of the foreign exchange market because of its dampening effect on the demand for foreign exchange, it was however convinced that this would simultaneously dampen investment growth, widen the output gap, depress aggregate demand and weaken output growth.
On the decision to hold, he said, “The MPC recognises the fact that it had held the policy rate and other policy parameters constant over the last several meetings. The Committee underscores that by holding its policy position constant, it has confidence in the various policies and administrative measures deployed by the Bank which have resulted in the moderation in domestic price levels and stability in the foreign exchange rate.
“Thus, a hold position is an expression of confidence in the policy regime, given the gradual improvements in both output growth and price stability. On this premise, the downside risks to growth and upside risks to inflation appears contained” he remarked.
While fielding questions from the press, he said that the CBN will soon unfold more measures to improve access to credit by the Micro Small and Medium Enterprises(MSME), adding that the Bank is determined to ensure ease in accessing credit.
“You should be able to do so with minimal stress and we will continue to deploy some of the programmes that we have put in place under the Anchor borrowers programme, to achieve access to credit to our small holder farmers particularly in our rural communities,
“Because, we feel that those are the areas that truly require the support and with them being happy and with access to credit, we know rural communities will be enhanced, improved and from there we can see the growth of our economy”, he said.
On the MTN issue, he said that it is being resolved and there is no need for any body to worry. “There are several issues involved in the matter of the repatriation. It is better for you to be slow in taking some of these decisions but when you take them, you know that they are potent and that there is a rational for those decisions
“There is rational for the decision we took because we expected certain documents to be submitted, those documents have now been submitted we are in the process of saying these matters will be resolved.
“We have held meetings with the MTN group and I am optimistic that we are getting to the end of this issue and I repeat and I will continue to say so that the sanctity of the CCIs issued by our banks to foreign investors remains sacrosanct and no other company is being investigated on the issue of CCI, this is an isolated matter”, Emefiele said.
Speaking on election spending, he said that the Bank has had meetings with the Deposit Money Banks (DMB), and have warned them to be very careful and wary of money laundering issues.
“I believe they will be careful themselves because they have been told that if they are caught they will be heavily penalised”, he ended.