The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has kept the Monetary Policy Rate (MPR) constant at 13.50%. Also, other parameters such as Cash Reserve Ratio (CRR), Liquidity ratio, and asymmetric corridor remain unchanged.
The Governor of CBN, Mr. Godwin Emefiele, disclosed this while reading the communique at the end of the two-day MPC meeting on Tuesday in Abuja.
According to Emefiele, the decision of the MPC to hold all rates was informed by the conviction of the committee members that key macroeconomic indicators were trending in the right direction.
Reasons for keeping MPR constant
While considering the upsides and downsides of the options to tighten, hold or loosen, the MPC noted that while tightening might encourage capital inflows, it also has the downside consequence of constraining the already nascent recovery in output growth.
- On loosening the MPR, the MPC noted that a reduction in the policy rate would improve growth prospects, but in view of the uptick in inflation partly due to border closure pressure, a balance of risks was in favour of protecting price stability.
- In considering to hold MPR, the MPC noted the in line with the on-going recovery in the economy and the decline in market interest rates, growth in domestic credit amongst other positive developments, there would be more gains in the short to medium term in holding policy at its current position.