By Gift Samuel, The Sight News
Abuja-The Monetary Policy Committee of the Central Bank of Nigeria(CBN)has again retained the Monetary Policy Rate (MPR) at 14.0 per cent alongside all other policy parameters.
The reconstituted Committee after its two day meeting on Wednesday, decided unanimously by a vote of all members present to retain the Monetary Policy Rate at 14.0 per cent, Cash Reserve Ratio (CRR) at 22.5 per cent; Liquidity Ratio at 30.0 per cent; and Asymmetric corridor at +200 and -500 basis points around the MPR.
Briefing newsmen after the meeting, the Governor, Central Bank of Nigeria(CBN), Mr.Godwin Emefiele stated that the decision to hold was arrived at following the Committee’s belief that key macroeconomic variables have continued to evolve in a positive direction in line with the current stance of macroeconomic policy and should be allowed more time to fully manifest.
Emefiele while reading the communique of the first MPC meeting in 2018, noted that, “The Committee was of the view that further tightening would strengthen the impact of monetary policy on inflation with complementary positive effects on capital flows and exchange rate stability. Nevertheless, it could potentially dampen the positive outlook for growth and financial stability.
“However, the Committee is of the view that loosening would strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing. This may, however, lead to a rise in consumer prices, generating exchange rate pressures on the currency in the process. The Committee also believes that loosening could worsen the current account balance through increased importation” he said.
The CBN Governor added that the Committee pointed out that at 14 per cent, the policy rate was tight enough to rein-in current inflationary pressures and therefore reaffirmed its commitment to price stability conducive to sustainable and inclusive growth.
He further said that the Monetary Policy Committee observed increasing monetization of oil proceeds as evident in the growing FAAC distribution, relative to the 2017 level of disbursements, and so urged the Government to initiate strong stabilization programmes and to freeze the growth in its aggregate expenditure and FAAC distributions in order to create savings needed to stabilize the economy against future oil price related shocks.
According to Emefiele, “The Committee noted with satisfaction the gradual implementation of the Economic Recovery and Growth Plan, in an effort to stimulate economic recovery. In the same vein, the Committee urged quick passage of the 2018 Appropriation Bill by the National Assembly, so as to keep fiscal policy on track and deliver the urgently needed reliefs in terms of employment and growth for the citizenry”.
On interest credit, he said, “The Committee reiterated the Bank’s commitment to delivery of low interest credit as evidenced in its bold steps to adopt unconventional monetary policy to aid credit flow to vulnerable and growth enhancing sectors of the Nigerian economy.
“The Committee therefore, enjoined the Bank to continue to support and encourage credit delivery at single digit interest rate through other mechanisms in the interim, while encouraging the banking system to establish frameworks to increase credit delivery to the employment generating sectors of the economy” he added.
The Governor stated also that the committee commended the launching of the Food Security Council by the Federal Government to improve food sustainability, saying that it is a step in the right direction.
While fielding questions from Newsmen, he assured that the Central Bank of Nigeria will support whatever measures needed to boost food Security in Nigeria.
Present at the meeting were the two newly appointed Deputy Governors as well as the three newly appointed MPC members.