CBN MPC Leaves Monetary Policy Ration Unchanged at 14percent

, Magazine

The Central Bank of Nigeria at its first Monetary Policy Committee (MPC) meeting for the year 2019, opted to leave the Monetary Policy Rate unchanged at 14% while Cash Reserve Ratio and Liquidity Ratio were left at 22.5% and 30% respectively.

Why were rates left unchanged?

In a bulletin read after the meeting at Central Bank District Abuja, Godwin Emefiele, the Governor of CBN had stated that the possibility of loosening the rates was remote due to domestic and global inflationary pressures.

Tightening, on the other hand, would increase the cost of credit as well as elevate credit risk in the economy. In addition, it would worsen the position of non-performing loans with the bank, as well as hamper the fragile growth rate.

Implications 

The move has a neutral effects on both businesses and investors holding treasury bills.

For businesses expecting lower interest rates, they may have to stay put for a while, as the Apex bank may not cut rates in the medium term. And for investors holding treasury bills. Tightening would have led to higher yields while a cut would have led to lower yields.