The Central Bank of Nigeria (CBN) has voted that monetary policy rate, which measures interest rate to retain its status quo at 13.5 %
The Governor of the Central Bank, Godwin Emefiele, made the announcement on Friday during the MPC meeting in Abuja.
Speaking on why the monetary policy committee (MPC) retained the interest rate 13.5% for the third month consecutively Emefiele said that, “The committee has decided by a unanimous vote to maintain Monetary Policy Rate at 13.5% and to hold other policy parameters constant.
“In summary, the MPC voted to retain MPR at 13.5%, to retain asymmetric corridor at +200 and -500 basis points around the MPR, to retain CRR at 22.5% and to retain the liquidity Ratio at 30%”.
“Tightening in the midst of a fragile growth outlook would increase the cost of credit while loosening will heighten inflationary tendencies.
“Increased liquidity will result in exchange rate pressures as the money supply rises.
“Holding will require a clear understanding of the quantum and timing of liquidity injections into the economy before deciding on possible adjustments to the stance of monetary policy.”
The committee expressed its support for the federal executive council’s decision to increase value-added tax saying it would reduce the budget deficit and government borrowing when implemented.
“Committee noted that this was too little to close the gap in government financing and called on the government as a matter of urgency adopt a big bank approach towards building fiscal buffers by freeing up redundant public assets through an efficient and effective privatisation process,” Emefiele said.
“This would raise significant revenue for the government and resuscitate the redundant assets to generate employment and contribute effectively to national economic growth.”
The committee also advised the national assembly to “exercise restraint” from increasing budget oil benchmark since crude oil prices are projected to remain tight.
The federal government was also advised “to adopt other ways of funding its operations outside the banking sector” so that credit can be directed towards the private sector.