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The Central Bank of Nigeria Monetary Policy Committee (MPC) has retained the Monetary Policy Rate (MPR) at 14 per cent alongside all other policy parameters as in the last nine months.
Rising from the 254th meeting of the MPC, the Central Bank of Nigeria (CBN) said an interest rate cut at this time will worsen the inflationary conditions and undermine the current outlook for stability in the foreign exchange market.
The MPC also unanimously retained the Cash Reserve Ratio (CRR) at 22.5 per cent; Liquidity Ratio at 30.00 per cent; and the Asymmetric corridor at +200 and -500 basis points around the MPR.
The CBN governor, Mr. Godwin Emefiele, told newsmen at the end of the meeting that “inflationary pressures would begin to subside as non-oil output recovers and the naira exchange rate stabilizes.”
The committee noted that until that happened, “a rate cut would worsen the inflationary conditions and undermine the current outlook for stability in the foreign exchange market.”
It also feels that “doing so (interest cut) would further aggravate demand pressures while undermining existing income levels in the face of the already expansionary monetary policy and increasing inflationary pressure which will make the economy unattractive for foreign and domestic investment.”
“The medium term outlook based on available data and forecast of key economic variables indicate a more resilient economy in 2017. Growth is expected to turn positive in fiscal 2017, as prior policy lags converge and the fiscal space becomes more accommodative.
“In addition, the agricultural sector is expected to play a bigger role in driving growth, given the expansion of the Anchor Borrower Programme, as well as other developmental initiatives of the government.
The CBN boss also said: “The 60 percent set aside for the manufacturing sector, I will dare say that those in the power sector also qualify for that because they are also importing raw materials for power generation plants.
“So the power sector qualifies but the constraints that some of the local and small manufacturers are facing, may also be confronting the power sector companies, so we will try to appeal to banks to make the process easier.”
Rising from the 254th meeting of the MPC, the Central Bank of Nigeria (CBN) said an interest rate cut at this time will worsen the inflationary conditions and undermine the current outlook for stability in the foreign exchange market.
The MPC also unanimously retained the Cash Reserve Ratio (CRR) at 22.5 per cent; Liquidity Ratio at 30.00 per cent; and the Asymmetric corridor at +200 and -500 basis points around the MPR.
The CBN governor, Mr. Godwin Emefiele, told newsmen at the end of the meeting that “inflationary pressures would begin to subside as non-oil output recovers and the naira exchange rate stabilizes.”
The committee noted that until that happened, “a rate cut would worsen the inflationary conditions and undermine the current outlook for stability in the foreign exchange market.”
It also feels that “doing so (interest cut) would further aggravate demand pressures while undermining existing income levels in the face of the already expansionary monetary policy and increasing inflationary pressure which will make the economy unattractive for foreign and domestic investment.”
“The medium term outlook based on available data and forecast of key economic variables indicate a more resilient economy in 2017. Growth is expected to turn positive in fiscal 2017, as prior policy lags converge and the fiscal space becomes more accommodative.
“In addition, the agricultural sector is expected to play a bigger role in driving growth, given the expansion of the Anchor Borrower Programme, as well as other developmental initiatives of the government.
The CBN boss also said: “The 60 percent set aside for the manufacturing sector, I will dare say that those in the power sector also qualify for that because they are also importing raw materials for power generation plants.
“So the power sector qualifies but the constraints that some of the local and small manufacturers are facing, may also be confronting the power sector companies, so we will try to appeal to banks to make the process easier.”
