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Economy still vulnerable as MPC members retain all rates, monetary policy stance
Financial experts have given reasons why the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Wednesday left the Monetary Policy Rate (MPR) unchanged at 14 per cent.
The rate had been at 14 per cent since the last quarter of 2017.
Ahead of the meeting which was the first in 2018 due to delay by the Senate to screen and confirm MPC appointees as the tenure of some members had elapsed, pundits had expected a marginal reduction in the rate considering consecutive growth in the production capacity of the economy.
However, the CBN felt otherwise and retained the rate, suggesting that the economy may still be having issues with recovery from recession after all.
The CBN Governor, Mr Godwin Emefiele, announced the decision of the committee at the end of a two-day meeting held at the apex bank’s headquarters in Abuja, saying rates were retained considering the pressure from the over N2.7tn owed local contractors which had been one of the major causes of non-performing loans in banks; anticipated heavy spending in an election year; and impacts of insecurity in parts of the country which remains a key discouraging factor to existing and new investors to the ailing economy.
While noting that nine members of the committee unanimously agreed to maintain the current monetary policy stance, Emefiele averred that apart from the MPR which was retained at 14 per cent, the committee also retained the Cash Reserves Ratio at 22.5 per cent.
Business Hilights also gathered that both the Liquidity Ratio which was left at 30 per cent; and the Asymmetric Window which was left at +200 and -500 basis points around the MPR show that the economy is still technically jittery and not within safe limits.
Observers had expected that the sustained rise in MPI would have favoured rates reduction but that was overtaken by the unanimous decision of the members. Several finance analysts who reviewed reasons given by the CBN concurred on the key reasons lined out by the CBN to retain the rates.