Why MPC Retained Rates – Governor Emefiele

The Monetary Policy Committee (MPC)   of the Central Bank of Nigeria (CBN) on Tuesday announced it would retain the country’s Monetary Policy Rate (MPR) at 11.5 per cent citing the need to maintain stability Governor Godwin Emefiele has said.

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 Reserved Ratio (CRR) was, thus, retained at 27.5 per cent, Liquidity Ratio, 30 per cent and Assymetric Corridor, +100 and -700 Basis Points around the MPR.

Emefiele said the committee members agreed that changing the 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 channeled to either frivolous importation or speculative holding of foreign exchange, leading to foreign exchange depreciation and inflation,” Emefiele said of the decision of the MPC to retain the rates.

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.” (NAN)

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