The Central Bank of Nigeria (CBN) yesterday, left the country’s benchmark Interest Rate unchanged at 14 per cent, alongside all the other monetary policy rates for the seventh consecutive time over fears of consequent inflation.
While the majority of the policymakers had favored retention of the 14-month old policy direction, inflation has however been seen moderating from 18.7 per cent high within the period to 16.01 per cent last month.
It is now obvious that whatever rationale behind the persistent calls for interest rate cut by stakeholders would have to wait till the last meeting of the year in November.
Other rates retained include the Cash Reserve Requirement and Liquidity Ratio for Banks at 22.5 per cent and 30.0 per cent respectively. Also, the Asymmetric Corridor- CBN and Banks’ lending and borrowing relationship is retained at + 200 basis point (16 per cent for Apex Bank lending to banks) and -500 basis points (nine per cent for depositing cash at CBN).
Financial experts had told The Guardian earlier that the policymakers would retain all the rates, as the prevailing economic situation would make any rate cut counter-productive.
The Chief Executive Officer, Global Analytics Consulting, Tope Fasua, predicted that besides leaving the rates unchanged yesterday, there may not be an enabling economic environ to cut interest rate in the next meeting.
CBN Governor, Godwin Emefiele, while reading the communiqué of the Monetary Policy Committee, said: “Loosening at this time would exacerbate inflationary pressures and worsen the exchange rate and inflationary rate condition.”
Inflation at 16.01 per cent, though easing, remained high and the country’s exit from recession is just marginal at 0.55 per cent, while majority of the masses are faced with high cost of staple food.
The Bank chief pointed out that the effects of fiscal policy actions towards stimulating the economy have begun to manifest as evident in the exit of the economy from the 15-month recession.
However, he warned that the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decisions to strengthen the recovery.