According to the CBN boss, The committee had agreed to keep the Monetary Policy Rate at 14 percent, the Cash Reserve Ratio at 22.50 percent and the Liquidity Ratio at 30 percent.
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“While it noted that stagflation is indeed a very hard economic condition that continues to threaten the economy, the MPC said “the policy framework must be reengineered urgently to provide a lever for reversing the negative growth trend” so far recorded, stating that monetary policy alone can not move the economy out of stagflation”.
Abuja – The Central Bank of Nigeria held its key interest rate on Tuesday, opting to reassure jittery currency investors rather than cutting rates to help growth.
The Central Bank of Nigeria (CBN)’s Monetary Policy Committee yesterday announced that it would be retaining Monetary Policy Rate at 14 per cent, with Governor Godwin Emefiele saying the subsisting rate “has attracted $1 billion” in foreign investment in the last two months, and that price level outlook was already moderating.
In the final analysis, Emefiele, who was flanked by members of the committee while addressing the media, said: “The Bank has and shall continue to deploy its development finance interventions to complement the overall effort of fiscal policy towards reinvigorating the economy”. It has nothing to do with the MPC’s decision to leave the interest rate unchanged.
Though the MPC decision appears broad in line with market expectation, and as such, no significant changes is expected in the financial markets, but there are some critical consequences across fiscal and monetary policy lines. The upside risks to the inflation outlook are the unanticipated shocks, especially with regards to the intermittent upward adjustments in petroleum and utility prices, and their second round effects. However, the headwinds to growth include tighter fiscal consolidation, declining private sector credit and delayed recovery in commodity prices.
On execution of the Government’s budget for the first half of 2016, Provisional data showed a deficit of 3.1 per cent of GDP against a target of 2.6 per cent.
“There was $109.40 million revenue increase in Federation Export Sales as a result of the increase in average prices of crude oil from $42.21 in April to $46.06 per barrel in May 2016”, Adeosun said. In the year to September 15, 2016, the Ghana cedi cumulatively depreciated by 4.1 percent compared with 16.0 percent depreciation in the same period of 2015. The stability of the currency is expected to be sustained, supported by the continued policy tightness, proceeds from the recently issued Eurobond, inflows from donors and the pre-export finance facility for cocoa.
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“That has not necessarily been forthcoming today”, she added.
