Why MPC Held Rates – Gov Emefiele

The Monetary Policy Committee, MPC of the Central Bank has resolved to hold monetary rates at third-quarter level including the benchmark MPR which is to be sustained at 13.5%.

Governor Godwin Emefiele briefing newsmen at the end of the two-day MPC meeting which was the last of the year also said that all the 11 members of the committee attended the meeting and unanimously voted for the decision.

He said the committee also retained Cash Reserve Ratio (CRR) at 22.5 per cent and the Liquidity Ratio at 30 per cent.

The CBN said that the MPC also retained the Asymmetric Corridors at +200 and -500 basis points around the MPR.

He explained that the committee reviewed the upside and downside on the option to tighten, loosen or hold.

Emefiele said while tightening might encourage capital flow, it also had downside consequences of tightening the already nascent recovery outlook growth.

He said that the MPC noted that the reduction in the policy rate would improve growth prospects but in view of optic inflationary pressure, decided that the balance of the risk was in favour of protecting price stability.

Emefiele enumerated the steps taken by CBN in this direction to include policy on loan to deposit ratio which had resulted in loans advancing and rising by N1.1 trillion between June and October.

He said this action had assisted the agriculture and manufacturing sectors hence the positive outcome on the GDP.

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