The Monetary Policy Committee of the Central Bank of Nigeria has retained the Monetary Policy Rate at 11.5 per cent. It also left other parameters the same. The CBN Governor, Godwin Emefiele, disclosed these after the committee’s two-day meeting in Abuja on Tuesday, 24th of November 2020.
“In summary, the MPC voted to retain the MPR at 11.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the Cash Reserve Ratio at 27.5 per cent; and retain the Liquidity Ratio at 30 per cent,” he said. Emefiele also said the medium-term outlook for the global economy was beginning to show a ray of optimism following the discovery of COVID-19 vaccines, and Nigeria is expected to recover from recession by end of 2020.
He said in the domestic economy, available data and forecasts for key macroeconomic variables suggested optimism in output growth in the fourth quarter of 2020, due to the positive outlook for most economic activities. “Accordingly, the economy is expected to recover from recession by the end of 2020, while inflation is projected to moderate by the first quarter of 2021,” he said.
He said the committee noted that inflation continued to be driven by supply side disruptions arising from the COVID-19 pandemic and other legacy factors. Key amongst these were the security challenges in parts of the country; increase in food prices; and the recent hike in pump price of PMS and electricity tariff, he said.
The CBN Governor said the MPC therefore emphasised the need to address structural supply side issues putting upward pressure on costs of production and unemployment. Commenting on the outcome of the MPC meeting, the Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, said the outcome was expected. He said, “The CBN has practically exhausted its policy arsenal as far as credit stimulus to the economy is concerned. The economy has been evidently impacted by the monetary policy measures”.
“We have a multitude of intervention funds, the Loan to Deposit Ratio, guidelines on treasury bills, Federal Government Bonds and Open Market Operations.” However, he said, the bigger issue for many businesses is the liquidity crisis in the foreign exchange market.