The Monetary Policy Committee (MPC) of the Central Bank of Nigeria, has retained its interest rate at 13.5%, amid rising inflation.
Disclosing this to Journalists in Abuja on Tuesday, the CBN Governor, Mr.Godwin Emefiele, said that after considering the necessary variable, the MPC decided to hold existing rates by a vote of 9 members out of 11.
In line with this, the Monetary Policy Rate(MPR) was held at 13.5 percent; Asymmetry corridor of +200 and -500 basis point around MPR; cash reserve ratio (CRR) at 2.5 percent and; liquidity ratio at 30 percent.
Recall that the regulator in March 2019, cut the Monetary Policy Rate, from 14 percent to 13.5 percent, the first in three years.
Meanwhile, the Governor while speaking on the issues of Non-Performing Loans (NPL), revealed that the MPC has directed management to think about administrative, legal and regulatory framework to ensure that some of the credit risks associated with granting loans to the private sector that ordinarily results in NPLs are mitigated.
He added that this should be done in such a way that when banks decide to begin to lend to private sector or increasingly, that the probability that NPLs will rise should be moderated.
Furthermore, he stated that the CBN has observed that the banks rather than focusing on granting credit to the private sector, tend to redirect their focus mainly in buying government securities, adding that the Monetary Policy Committee has frowned at that and has directed the management of the Central Bank to put in place policies or regulations that will restrict the banks from unlimited access to government securities.
“It is important and expedient that the Committee gives these directive to management because this country badly needs growth. For us to achieve growth, those whose primary responsibility that it is to provide credit, who act as intermediaries in providing credit and are called the catalysts to credit and growth in the economy must be seen to perform that responsibility and they would.
“Rather than perform that responsibility to the private sector that is the engine of growth to our economy, instead of doing that, that they will be directing their liquidity to other sectors of the economy is what the MPC frowns at and has therefore given the management the power to think of what to do to limit their propensity for government securities rather than directing credit to the private sector of the economy”, he said.
He noted that despite the relative improvement in the microeconomic variables in Nigeria, there are still enormous challenges ahead.
In his words, “In this next phase, there will be a need for us to aggressively be thinking of how to improve the level of employment and reduce unemployment in our country.
“There is a relationship between employment level, improved economy and the level of security in the country, so we all have to work together”.
He appealed to those making life difficult for people to go to their farms, to produce and conduct their farming activities, to please allow the farmers particularly in the food-producing belt who are currently affected to go to their farms.
“When people go to farm, they get employed because they can sell their farms produce, feed their families and employ other people and invariably reducing the level of insecurity in the country”, the Governor remarked.