CBN raises MPR to 13%, blames high inflation
…Says Nigeria still in JP Morgan’s bond index
By Seun Ibiyemi
The Central Bank of Nigeria (CBN) has increased the Monetary Policy Rate (MPR) to 13 per cent for the first time in over two years.
The Governor of CBN, Mr Godwin Emefiele said this while reading the 285th communiqué issued at the end of the apex bank’s Monetary Policy Committee (MPC) meeting on Tuesday.
Emefiele said that the committee also decided to retain all other parameters.
Thus, the asymmetric corridor was retained at +100/-700 Basic Points around the MPR, the Cash Reserve Ratio (CRR) retained at 27.50 per cent and the Liquidity Ratio retained at 30.00 per cent.
Recall that MPC had retained the former MPR of 11.5 per cent for over two years.
Emefiele said the committee was faced with various options, but guided by the need to slow down inflationary pressure while engendering economic growth.
He said that, though the 11 MPC members unanimously voted to raise the MPR, they provided divergent opinions on the level of increase.
“Six members voted to raise the MPR by 150 basis points, four members’ by100 basis points and one member, by 50 basis points.
“Members expressed deep concern about the continued uptrend of inflationary pressure in spite the gradual improvement in output growth.
“Committee notes that the current rise in inflation is inimical to growth and the full recovery of the Nigerian economy,” he said.
He said that several options were considered before the decision to increase the MPR.
“After carefully reviewing developments in the two months, and outlook of growth in the domestic and global economy as well as downsides of each policy.
“It is clear and compelling that tackling inflation is more urgent in sequence of policy objectives.
“MPC urged the CBN to double its effort at supporting the priority growth-enhancing sectors of the economy.
“It urged the Federal Government to do more to provide a safe and secure environment for economic activities to stimulate growth,” he said
He also discredited media reports that JP Morgan delisted Nigeria from its bond index.
According to him, Nigeria is still in the index.
“Let me say that contrary to widespread media reports that we were delisted or that we were removed from the JPMorgan bond index; and the truth is that, that is very untrue. Nigeria is still in their index.
“We were only reclassified, Nigeria’s rating, I will say was reclassified from overweight to market weight, which is just a mere reclassification of our size in the index.
“So, let me say and I repeat, Nigeria has not been delisted from any JP Morgan bond index.
“We have the report here, page 10 of it; I won’t bore you with it. You can go online and read it. Page 10 was specifically devoted to Nigeria. And it was very, very clear the reason why Nigeria’s rating was moved from overweight to just market weight,” Emefiele said.
JP Morgan’s Emerging Markets Bond Overweight and Underweight are used to make recommendations on stocks to buy or avoid.
When a stock has an overweight recommendation, it is projected to outperform its sector in the near future.
The US based bank said Nigeria had failed to utilise the global rise in crude oil prices to boost foreign reserves.
