The Monetary Policy Committee of the Central Bank of Nigeria (CBN) rose from its two-day meeting in Abuja yesterday, retaining all the monetary policy rates for the 12th consecutive time.
Specifically, the committee decided that the Monetary Policy Rate (MPR) should still remain at 14 per cent, cash reserves ratio should be sustained at 22.5 per cent while liquidity ratio should hold at 30 per cent and the asymmetric corridor around the MPR to stand at +200/-500 basis points.
The CBN Governor and Chairman of the committee, Godwin Emefiele, in a statement issued at the end of the meeting noted that the nation’s economic recovery still remained fragile.
To improve the outlook and sustain the recovery, the seasoned banker canvassed the need for alignment of fiscal and monetary policies with a view to increasing consumption, assuring deceleration in inflation and improving the Gross Domestic Product (GDP) growth rate in the second half of the fiscal year.
He pointed out that while the apex bank would continued to explore ways of increasing lending to the economy and keep hold of inflation, it is also encouraging large companies to issue commercial papers at lower yields to stimulate productivity at a more accelerated rate in the economy.
Emefiele assured that the CBN would continue to explore avenues to support enterprises through lending at single-digit rates.
While also expressing concern over possible increase in liquidity arising from the implementation of the approved 2018 budget, the CBN Governor said that the bank could also invest in commercial papers issued by companies to create jobs and by so doing, mitigate the likely negative effects of excess liquidity in the economy.
Some analysts have said that the MPC cautiously retained the monetary policy rates despite the disinflationary trend in the economy over the months as a strategic option of pre-empting the impact of the 2019 pre-election spending.
Although the modest achievements of the monetary policy measures remain real in most sectors of the economy based on economic indices, the committee’s retention of the key rates, industry analysts say, is desirable for the economy if only to tackle the challenges of excess liquidity and encourage lending to enterprises in the medium term.
