CBN Retains Benchmark Interest Rate, Keeps Parameters Steady
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday announced the retention of the country’s Monetary Policy Rate (MPR) at 11.5 per cent.
Monetary authority decision not to challenge the status quo despite a fresh inflation rate jump in December 2021 aligned with analysts consensus which noted that the apex bank would not rock the boat with alteration to policy rates.
At the end of the first MPC meeting in 2022, Mr Godwin Emefiele, the CBN Governor, announced that the committee also unanimously agreed to retain all other monetary policy parameters.
The Cash Reserve Ratio (CRR) was, thus, retained at 27.5 per cent, Liquidity Ratio, 30 per cent and Asymmetric Corridor, +100 and -700 Basis Points around the MPR.
Emefiele said the committee members agreed that changing the monetary policy rates at this time was not desirable as it could worsen inflation and reverse recent economic gains.
“It was clear that a loosening option was not desirable because it could trigger further liquidity challenges and fuel inflationary pressure.
“Loosening can also trigger foreign exchange pressure, as the excess liquidity could be channelled to either frivolous importation or speculative holding of foreign exchange, leading to foreign exchange depreciation and inflation,” he said.
He added that the MPC also jettisoned the tightening option “in view of the fragile state of the current Gross Domestic Product (GDP).
“After careful consideration of all variables, MPC decided to hold all parameters constant.” # CBN Retains Benchmark Interest Rate, Keeps Parameters Steady