The monetary policy committee of the Central Bank of Nigeria
(CBN) has voted to retain the monetary policy rate (MPR), which measures
interest rate, at 11.5 percent.
The monetary policy rate (MPR) is the baseline interest rate
in an economy, every other interest rate used within an economy is built on the
MPR.
Addressing journalists on Tuesday after the committee’s first
meeting for the year at the CBN headquarters in Abuja, Godwin Emefiele,
governor of the apex bank, 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 and liquidity ratio at 30 percent.
Throughout 2021, the committee also held MPR constant.
“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.
“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 remain high, driven by persistent exchange rate fluctuations and
supply bottlenecks.
The committee noted that the increase in the country’s
inflation rate in December 2021 is attributable to increased demand during the
yuletide, suggesting that the uptick in the numbers could be a temporary
development.
In December 2021, surging food prices push inflation to
15.63 percent — the first increase after 8 months of decline.
According to Emefiele, the members are of the view that
inflation will moderate further going into the new year, driven by the
significant interventions in the agricultural sector.
The CBN MPC highlighted that the Nigerian economy is
expected to continue with positive growth following the impressive growth
recorded in the third quarter of 2021, reflecting continuous recovery from the
recession.
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