The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has voted to retain the Monetary Policy Rate(MPR) at 14 percent at its meeting held between 22-23 May, 2017 at the CBN headquarters , Abuja.
The Governor of the apex bank, Mr. Godwin Emefiele who announced the decision said the committee also voted to retain all other parameters such as the Cash rediscount Rate(CRR) at 22.5 percent, Liquidity Ratio at 30 percent and also the Asymmetric Corridor at +200 and -500 basis points around the Monetary policy rate.
Said he: “In consideration of the challenges weighing down the domestic economy and the uncertainties in the global environment, the Committee decided by a unanimous vote of the 8 members in attendance to retain the MPR at 14.0 per cent alongside all other policy parameters. One member was absent at the meeting”
Mr. Emefiele further said that “against the backdrop of the rather unclear outlook around key economic activities (food production especially) and some optimism about current deceleration in inflation as well as relative stability in the naira exchange rate, the MPC was reluctant to alter the current policy configuration in any fundamental manner”
He said the development was deliberately made to allow the existing policies to fully achieve their intended goals and objectives.
“On the other hand, the Committee noted that the cost of capital in the economy remains high and not helpful to growth. The MPC was however, concerned that loosening would exacerbate inflationary pressures and worsen the gains so far achieved in the exchange rate of the naira. It was also convinced that loosening would further increase the negative real interest rate as the gap between the nominal interest rate and inflation widens.”
On the financial stability outlook, Emefiele said that in spite of the banking sector’s resilience, the weak macroeconomic environment has continued to exert pressure on the banking system, adding that the MPC urged the CBN to intensify its surveillance, in order to address emerging vulnerabilities.
The Committee also called on the Deposit Money Banks to step up credit to the private sector to support economic recovery and convey a positive feedback to the financial system