MPC Takes Middle Road Between Fighting Inflation And Growth

The Central Bank of Nigeria (CBN) on Tuesday held its 277th Monetary Policy Committee (MPC) meeting, the first in 2021, where members voted unanimously to retain the Monetary Policy Rate (MPR) at 11.5 per cent.

Governor Godwin Emefiele disclosed this while reading the communiqué from the meeting.

Emefiele said the MPC also agreed to retain Cash Reserve Ratio (CRR) at 27.50 per cent, Liquidity Ratio at 30 per cent and the Assymetric Window at plus 100 and minus 700 basis points around the MPR.

The News Agency of Nigeria (NAN) recalls that all prevailing rates were equally agreed on during the last MPC meeting on Nov. 24, 2020.

The CBN governor said the committee was confronted with policy choices, either to aggressively reverse inflationary pressure in the country or support measures aimed at enhancing growth and reversing the current economic recession.

“MPC agreed to reverse the inflationary trend and pursue price stability in the growing economy. MPC opined that an aggressive expansionary measure may worsen inflation and result to negative consequences on the exchange rates.

“On this basis, MPC agreed to hold all basic parameters constant.

“MPC was of the view that the CBN should pursue its strategy of systematic synchronisation  of monetary and fiscal policy accommodation through its development finance initiatives aimed at mitigating the impact of the COVID-19 pandemic on Nigerians,’’ he said.

Emefiele added that the committee encouraged the Federal Government not to consider another wholesale lockdown of the economy so as not to reverse the gains of the various economic stimulus packages provided in 2020.

“It also encouraged the CBN to improve credit facilities to households, Micro, Small and Medium Enterprises (MSMEs),  the  health sector as well as the agriculture and manufacturing sectors,’’ he said.

He added that such a move was expected to increase manufacturing output and improve the GDP.

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