The Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele yesterday presided over his First Monetary Policy Committee (MPC) Meeting with the announcement of the committee’s decision to retain the existing 12 per cent Interest Rate.
The Committee also retained the Liquidity Ratio at 30 per cent; public sector Cash Reserve Requirement at 75.0 per cent; and private sector Cash Reserve Requirement at 15.0 per cent respectively.
Briefing newsmen shortly after the meeting, the CBN Governor said, “the Committee decided by a unanimous vote to retain the current stance of monetary policy with one member voting for an asymmetric corridor around the MPR.
“Consequently, the MPC voted to: Retain the MPR at 12 per cent with a corridor of +/- 200 basis points around the midpoint; Retain the Liquidity Ratio at 30 per cent; Retain the public sector Cash Reserve Requirement at 75.0 per cent; and Retain the private sector Cash Reserve Requirement at 15.0 per cent.”
Emefiele said, the Committee noted that all measures of inflation have witnessed progressive upward trend since February 2014 and agreed that this trend should be monitored closely to achieve a reversal.
He said, the Committee was satisfied with the relative stability in the macro-economy as reflected in the impressive growth rates, stable consumer prices and exchange rate as well as increased external reserves.
“It was however concerned about the weak translation of stability to microeconomic gains in employment and access to finance especially by small and medium scale businesses. It, therefore, emphasized the need for the MPC decisions to take into account the long run impact on employment level, wealth creation and growth of businesses.
“The Committee noted the potential of the power sector to stimulate output growth through enhanced investment and the spill-over effect in employment generation if the challenges confronting the sector are effectively and appropriately addressed,” he said.
Overall, he said the Committee noted that the policy direction for inflation, exchange rate and interest rate must be seen not only in the context of price and financial stability but also in enhancing the quality of life of Nigerians and promoting employment generation.
The decision of the committee however, met the expectation of most economists and financial market analysts to retain the monetary policy tools.