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CBN Emefiele 77

Just in: CBN’s MPC votes to leave all monetary policy metrics unchanged

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The Monetary Policy Committee (MPC) of the Central bank of Nigeria (CBN), Tuesday, unanimously elected to maintain the status quo by keeping all monetary policy metrics at current levels.

The rates are left as follows:

*Monetary Policy Rate (MPR) at 13.5%;

*Asymmetric corridor around the MPR at +200/-500bps;

*Cash Reserves Ratio (CRR) at 27.5%; and

*Liquidity Ratio (LR) at 30.0%.

Technical summary of the meeting revealed that the Committee considered developments in the global and domestic economy since its last meeting including (1) the negative impact of COVID-19 on global growth, (2) Dovish global central banks’ responses to the COVID-19, and (3) rapid pace of decline in global oil prices.

On the domestic front, the Committee noted (1) sustained inflationary pressure (February: +7bps to 12.20% y/y), (2) weaker oil earnings due to lower oil prices, and (3) recent volatility in the FX market amid declining external reserves.

Our key takeaway is that the committee appeared to have lost faith in the effectiveness of a rate cut in tackling economic growth-related problems. Rather, it expressed its confidence in utilizing other expansionary toolkits to limit the impact of COVID-19 on economic activities.

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