Why CBN Held Rates – Gov Emefiele

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), has retained Monetary Policy Rate (MPR) at 12.5 per cent and held all other policy parameters constant.

The CBN Governor, Mr Godwin Emefiele disclosed this while reading the communique after the MPC meeting in Abuja on Monday.

Emefiele explained that the committee retained the asymmetric corridor of +200/-500 basis points around the MPR.

He said the MPC also retained the Cash Reserves Ratio (CRR) at 27.5 per cent as well as Liquidity Ratio at 30 per cent.

“As a result, the Committee noted that the earlier downward adjustment of the MPR by 100 basis points to 12.5 per cent to signal the loosening monetary policy stance is yielding positive impact as credit growth increased significantly in the economy.

“The Committee also noted the positive impact of the various fiscal and monetary interventions on households, SMEs and manufacturing sectors.

“The MPC also noted that increasing MPR at this stage will thus be counter-intuitive and will result in upward pressure on market rates and cost of production,” he said.

He disclosed that the committee decided by a vote of eight members to hold and two members voted to reduce MPR while all members voted to retain all other policy parameters.

The News Agency of Nigeria (NAN) recalls that in May, MPC reviewed downwards Monetary Policy Rates from 13.5 per cent to 12.5 per cent.

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