The bank says increasing the rate will hinder the recovery of the economy, while an expansionary policy will make inflation worse. The Central Bank of Nigeria has retained the monetary policy rate at 11.5 per cent, with the assymetric corridor of +100/-700 basis points around the MPR.
The CBN governor, Godwin Emefiele, announced this Tuesday after the Monetary Policy Committee meeting that began Monday. The bank also held other parameters. Addressing journalists at the end of the 2-day meeting of the Monetary Policy Committee (MPC) meeting in Abuja, Mr. Emefiele said the committee voted to keep the Cash Reserve Ratio (CRR) at 27.5 per cent as well as the Liquidity Ratio at 30 per cent.
In May, the MPC had retained the monetary policy rate at 11.5 per cent, with the assymetric corridor of +100/-700 basis points around the MPR. The committee also voted to retain the Cash Reserve Ratio (CRR) at 27.5 per cent as well as the Liquidity Ratio at 30 per cent. The committee argued that the move was expected to allow further economic growth, despite four-year high inflation, after the country exited recession last year.
On Tuesday, Mr. Emefiele said the MPC noted that although headline inflation remained above the CBN’s target range of between six and nine per cent, the bank’s intervention in various sectors of the economy would help push inflation downward. It noted the gradual recovery in economic output growth, and hoped the second quarter growth will be better.
The bank said it was delighted that inflation was beginning to trend downward, but that it needs to apply measures to further reduce inflation. The bank urged banks to use its discretionary measures to help check inflation by mopping excess money out of the system.