The Central Bank of Nigeria (CBN) on Monday retained the Monetary Policy Rate (MPR) at 11.5 percent, and also left other lending parameters unchanged as global economic uncertainties, including the Russia-Ukraine triggered disruptions, continue to mount with attendant negative implications for national economies.
The decision of the committee was taken at the end its g 141st meeting held in Abuja
Justifying its decisions in a communiqué issued at the end of the meeting, the MPC stated: “The Monetary Policy Committee (MPC) met on 21st March, 2022, in an environment of heightened geopolitical tensions and persisting macro-economic uncertainties, associated with the recent Russia- Ukraine crisis and headwinds stemming from the lingering impact of the COVID-19 pandemic.
“The Committee reviewed developments in the global and domestic environments in the first quarter of 2022 and the outlook for the rest of the year.
“These include the likelihood of tightening external financial conditions associated with monetary policy normalization in the advanced economies, the cocktail of sanctions imposed on Russia, global supply chain disruption associated with the invasion of Ukraine, and increasing vulnerabilities associated with the burgeoning global private and public debt portfolio and risks to financial stability.
“Others include increased uncertainties across major financial markets and the increased risk of continuing rise in prices confronting central banks due to the huge monetary and fiscal stimuli injected into the global economy to subdue the downside risks to growth”, it added.
Briefing journalists at the end of the MPC meeting, the apex bank governor, Godwin Emefiele, said that both global and domestic macro and micro economic developments informed the decision to retain the MPR and also keep the other parameters unchanged.
Specifically, Emefiele disclosed that based on these considerations, the committee retained the Monetary Policy Rate (MPR) at 11.5 per cent; asymmetric corridor at +100/–700 basis points around the MPR; Cash Reserve Ratio at 27.5 per cent; and Liquidity Ratio at 30.0 per cent.
According to him, one of the considerations by the committee in retaining the MPR was its conviction that pushing borrowing costs to restrictive levels will not favour Nigeria’s economic recovery from the Covid-19 pandemic.
For instance, he explained that with Nigeria’s inflation currently at 15.7 percent which is still above the single-digit targeted by the apex bank, jacking up the MPR could accentuate the rising prices in the economy
Emefiele further noted that the sanction imposed on Russia by NATO and the USA would have a significant downside risk on the global economy, adding that the gains the country recorded as a result of lifting the COVID-19 restrictions have been eroded by the Russian-Ukraine crisis.
The CBN Governor blamed the high energy prices being experienced in the country on the Russian-Ukraine conflict, explaining that the MPC noted that high energy prices and the supply shortfall in recent weeks had aggravated Nigeria’s inflation.
