The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) for the 10th consecutive period held status quo at the ended of its first meeting in 2018 on Wednesday
The MPC meeting that was held in Abuja retained Monetary Policy Rate (MPR) at 14 per cent, also decided to leave the Cash Reserve Ratio (CRR) at 22.5 per cent; Liquidity Ratio (LR) at 30 per cent, and asymmetric corridor at +200 and -500 basis points around the MPR.
The CBN governor, Godwin Emefiele, at the end of the meeting explained that members resolved to keep lending rate as it was during the committee’s last meeting on November 21, 2017.
The meeting which was originally scheduled for January failed to hold following the inability of the Committee to form a quorum.
The new members appointed by President Muhammadu Buhari last year to fill the vacant positions left by former members who either retired or completed their tenures were recently confirmed by the Senate.
Emefiele, pointed out that other fundamentals were moderating steadily on the path of a firm economic recovery.
According to him, key macroeconomic variables have continued to evolve in a positive direction in line with the current stance of macroeconomic policy and should be allowed more time to fully manifest.
He said, “However, the Committee is of the view that loosening would strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing.
“This may, however, lead to a rise in consumer prices, generating exchange rate pressures on the currency in the process. The Committee also believes that loosening could worsen the current account balance through increased importation.”
The committee member urged the federal government to strongly exercise restraint on domestic borrowing in order to lower the cost of credit to the private sector.
He said, “The Committee noted that the continued low level of lending by banks remains a constraint to growth of the real sector of the economy.
“The Committee advised the Management of the CBN to continue to provide the required policy impetus to engender improved credit delivery by the deposit money banks to the economy.
“The Committee observed that, while this development may be a reflection of improved investor confidence in the economy, it cautioned that the Management of the Bank should carefully monitor the developments and to establish mechanisms for safeguarding the stability of the foreign exchange market in the event of a sudden capital reversal.
“The Committee observed the continued rise in oil prices, but acknowledged the inherent volatility in commodity prices and urged the Bank not to relent in building external reserves buffers against any future price downturns and as a means of sustaining investor confidence in the economy,” he explained.