The Monetary Policy Committee (MPC) for the 14th consecutive time, retained the Monetary Policy Rate (MPR) at 14 per cent. The Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele made this known at a news conference on Thursday, in Abuja on the outcome of the 264th MPC meeting.
Mr. Godwin Emefiele, Governor, CBN; Dr. Okwu Joseph Nnanna, Deputy Governor (Financial System Stability), CBN; Mrs. Aisha Ahmad, Deputy Governor, CBN; Prof. AdeolaFestus Adenikinju, MPC Member; and Mrs. Alice Karau, Ag. Director, Corporate Secretariat, CBN; at the CBN Head Office, Abuja, on Wednesday, March 28, 2018, following the assumption of duty of the new Deputy Governors and MPC members.
Emefiele said all 11 members were present at the meeting and they all voted to retain the MPR, which was last changed in July 2016. The Cash Reserves Ratio ( CRR) remained unchanged at 22.5 per cent, liquidity at 30 per cent and Asymmetric corridor at +200 and -500 basis points around the MPR. “The committee underscores that by holding its policy position constant, it has confidence in the various policies and administrative measures deployed by the Bank which have resulted in the moderation in domestic price levels and stability in the foreign exchange rate.
“Thus, a hold position is an expression of confidence in the policy regime, given the gradual improvements in both output growth and price stability. “On this premise, the downside risks to growth and upside risks to inflation appears contained.” He said that the committee noted that the economy was on the right path but some key sectors continued to experience significant challenges. “The MPC, however, expressed concern about the tepid growth expectations and growing uncertainty in the global financial markets. “These uncertainties are arising from the poor reception of the Brexit deal by British politicians, continuing trade war between the U.S. and her major trading partners, as well as the commencement of U.S. sanctions on Iran.”
Emefiele said that the committee believed that although the domestic economy was recovering modestly from recession, however, the recovery was tepid and efforts should be stepped up to strengthen aggregate output and demand. “In this regard, the committee urged the CBN to deepen and broaden access to finance to high employment elastic sectors with particular emphasis on small and medium scale enterprises. “The committee called on the CBN to extend the success recorded under the Anchor Borrowers Programme to other items, including fish and palm oil, by introducing more stringent measures to curb access to foreign exchange for products that can be produced within Nigeria.”
Emefiele said that the MPC welcomed the moderation in inflation in October, reflecting declining food prices. He said that the committee believes that given the negative output gap, the proposed increase in the national minimum wage would stimulate output growth due to prolonged weak aggregate demand arising from salary arrears and contractor debt. According to him, consequently, its impact on the aggregate price level will be largely muted, given that the monetary aggregates have largely underperformed in fiscal 2018.