The Monetary Policy Committee (MPC) has once again retained the Monetary Policy Rate at 14 per cent due to persistent uncertain economic conditions and high inflation. The Central Bank Governor, Mr Godwin Emefiele, made this known at a news conference on the outcome of the last Monetary Policy Committee meeting for the year 2017 in Abuja on Tuesday, 21st November, 2017.
He said that nine members were present at the meeting and while eight voted to retain the MPR and other monetary indices, one person voted to reduce the MPR by 100 basis point. “This means that the Cash Reserve Ratio still remained 22.5 per cent and Liquidity Ratio, 30 per cent. Also, the Asymmetric corridor is at +200 and -500 basis points around the MPR”.
“The committee took note of the gains made so far as regards its earlier decisions, thus extensively debated whether to hold, to tighten, or to ease the policy stance. “While tightening will strengthen the impact of monetary policy on inflation with complementary effect on capital flows and exchange rate stability, it nevertheless could also dampen the positive outlook for growth.
“On the other hand, loosening may strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing; it would nonetheless aggravate the upward trend in consumer prices and exchange rate pressures.
“On the argument to hold, the committee believes that key variables have continued to evolve in line with the current stance of macroeconomic stability policy and should be allowed to fully manifest,” he said. Emefiele said that the committee expressed satisfaction with the slow but gradual growth in the economy.
“The economy has begun to show strong signs of recovery as public investment has picked with increase housing construction at the Federal and State levels as well as rising at the ports to support the Purchasing Manager Index. “The committee was, however, of the view that policy makers must not relent in their aggressive policy initiatives aimed at continuing the positive growth trajectory.
“The committee affirms its commitment to maintaining price stability which is crucial to sustainable economic growth and development,” he said. Emefiele commended the Fiscal authorities for the early submission of the 2018 Appropriation bill for considerations. He said that if approved on time, it would help reposition the economy on the path to growth.
“On financial stability, the committee noted the concentration of non-performing loans in some sectors but observed that the overall outlook for the Banking system was stable as Deposit Money Banks balance sheets remains strong.
“Nonetheless, committee called for strengthening of oversight and early warning systems in other to promptly identify vulnerabilities and proactively manage risks in the Banking system. In the question and answer segment, when asked to comment on the sale of 9mobile, formally known as Etisalat, Emefiele said that the CBN would do all in its power to ensure smooth transfer of ownership to new investors.
“I am optimistic that the sale process is still on track, there is a determination that sale must take place before Dec. 31, 2017. “We remain focused on it. There are rumors that Barclays Africa, the financial advisers wants to withdraw from the transaction. If Barclays decide to do so, they will do so in a letter. Barclays was hired in a letter and if they decide to withdraw, they will do so in form of a letter; but as I speak with you, there is no letter from Barclays,” he said.