CBN retains interest rate at 11.5 percent

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has retained the interest rate parameters.

Addressing journalists on Tuesday after the committee’s first meeting for the year at the CBN headquarters in Abuja, CBN Governor, Mr Godwin Emefiele, said the committee members unanimously retained key rates.

He said the committee voted to maintain the key lending rate at 11.5 percent, with the asymmetric corridor of +100 and -700 basis points around the MPR, retain the Cash Reserve Ratio (CRR) at 27.5 per cent; and retain the Liquidity Ratio at 30 per cent.

“The MPC feels a hold will signal its realisation of the fragility of the growth recovery and its sensitivity to emerging global and domestic uncertainties. Hence, the need to sustain policy trajectory,” Emefiele said.

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“After a careful balancing of the benefits and downsides of each policy ratio, the MPC decided to hold all policy parameters constant.”

He said the committee believed that the existing monetary policy stance has supported the growth recovery and should be allowed to continue for a little longer for consolidation to achieve the MPC mandate of price stability that is conducive for sustainable growth.

The committee also felt that a hold stance would enable it to carefully appraise the implications of the unfolding global development around policy tapering and normalisation by advanced economies.

They observed that inflation in most developed and emerging economies remains high, driven by persistent exchange rate fluctuations and supply bottlenecks.

In December 2021, surging food prices pushed inflation to 15.63 percent — the first increase after 8 months of decline.

Emefiele also stated that attempts by the United States of America (USA) to adopt the normalisation policy, that is to return to pre-pandemic economic era does not pose any threat to Nigeria.

Money, particularly foreign exchange, that will flow out of developing economies, he said, will not affect Nigeria since stimulus package released by developed countries to stabilise their economy did not come to Nigeria.