The Monetary Policy Committee of the Central Bank of Nigeria (CBN) on Tuesday retained all the monetary policy rates for the 12th consecutive time.
Specifically, the committee left the Monetary Policy Rate (MPR) at 14 per cent, cash reserves ratio at 22.5 per cent, liquidity ratio at 30 per cent and the asymmetric corridor around the MPR rate at +200/-500 basis points at the end of its two-day meeting in Abuja
The CBN Governor, Godwin Emefiele, in a statement issued at the end of the meeting, indicated that the nation’s economic recovery still remained fragile.
In order to improve the outlook and sustain the recovery, he stated that the committee canvassed the need for alignment of fiscal and monetary policies to increase consumption, ensure deceleration in inflation and improve the Gross Domestic Product (GDP) growth rate in the months ahead.
He maintained that while the apex bank would continue to explore ways of increasing lending to the economy and keep hold of inflation, it will continue to encourage 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.
Expressing the committee’s concern over possible increase in liquidity arising from the implementation of the approved 2018 budget, the CBN Governor hinted that the bank could also invest in commercial papers issued by companies to mitigate the likely negative effects of excess liquidity in the economy.
Financial analysts have said that the MPC cautiously retained the monetary policy rates despite the disinflationary trend in the economy over the months 18 months as a deliberate strategy of pre-empting the impact of the 2019 pre-election spending.