CBN holds MPR at 13.5%

CBN holds MPR at 13.5%

The monetary Policy committee of the Central Bank of Nigeria (CBN) has announced its decision to maintain the monetary policy rate (MPR) at 13.5%.
Speaking to newsmen after the committee’s meeting in Abuja, the CBN governor, Mr Godwin Emefiele said the upward movement in inflation was expected due to several factors.
According to him, the cash reserve ratio (CRR) will be retained at 22.5%, liquidity ratio at 30% and asymmetric corridor at +200 -500 basis point.

“The committee noted the uptick in headline inflation year-on-year from 11.24% in September to 11.61% in October 2019,” stressing that the development was anticipated as part of the seasonal end of the year uptick in prices but was further accentuated by the border closure and expected temporary food supply shock which will adjust over the medium to long-term as the economy increases investments in food production.”
Throwing more insight into the committee’s decision, Emefiele said: “While tightening may encourage capital flows, it also has the downside consequence of stifling the already fragile recovery in output growth.
“The committee also noted that a reduction in the policy rate will improve growth prospects but in view of the uptick inflationary pressures, it decided that the balance of risk was in favour of protecting prices, interest rates, growth in domestic credit amongst other positive developments.
“Committee felt that there would be more gains in the short to medium term in holding policy at its current position. In its consideration to hold, the monetary policy noted with pleasure the positive outcomes of actions already taken by the bank.”
He said the committee projects that the country’s economy will grow by 2.38% in the fourth quarter of 2019 driven by the non-oil sector.