…retains MPR at 12%
The Governor of the Central bank of Nigeria, CBN, Mr. Godwin emefiele, said that the apex bank was closely monitoring government spending and those of individuals as the nation moves near to the 2015 elections with a view to taking proactive measures towards checking their negative effects on the economy.
He was answering reporters questions at his briefing on the outcome of the 96th Monetary Policy Committee, MPC, meeting which held in Abuja, where he also announced the retention of the Monetary Policy Rate, MPR, at 12% , with a corridor of +/- 200 basis points.
“We are monitoring the situation and the prevailing situation in the market; monitoring the spending of government and individuals as we go into election season”, he said.
The governor renewed his earlier commitment to driving down interest rates in the country, using monetary policies and said that the economy was already moving towards that direction.
His words, “we can see that the micro economy is beginning to move into the direction that we expect and we are going to see the reversal of interest rate in the near future. We are optimistic of the mandate of bringing down the interest rate. We will do everything doable to ensure that this is achieved. We will do that within the ambit of the parameters involved and ensure that we do not create another problem for the people.
“We are working on the issue of interest rate, a statement I made on June 5th in my inaugural speech in which I said that we are going to pursue a gradual reduction of interest rate, it is a five year agenda that we made”.
Increasing inflation
Mr. Emefiele’s assurances notwithstanding, the inflationary pressures were evident, a situation he admitted but attributed to low agricultural harvest in the North East and North central, currently facing debilitating security challenges there.
His words, “developments in the aggregate price level suggest an underlying inflationary pressure since January 2014. The year-on-year headline inflation steadily inched up marginally from 7.9 per cent in April to 8.0 per cent in May 2014 and further to 8.2 per cent in June.
“The up-tick in June was, however, largely attributed to the rise in food inflation which rose from 9.7 per cent in May 2014 to 9.8 per cent in June while core inflation, on the other hand, rose from 7.7 per cent in May 2014 to 8.1 per cent in June.
“The Committee further expressed concern about the liquidity level and the trending uptick in inflation which may not be unconnected with the poor harvest in some agricultural producing areas, particularly in the north eastern and central states of the country.
Foreign Reserves now $40. 2 billion
The CBN boss revealed that foreign reserves has risen to $40.2 billion and urged that reserves accretion needed to improve much faster to provide a strong and more resilient buffer to fiscal operations.
“Gross official reserves rose to US$40.20 billion by 18 July from US$37.31 billion at end-June 2014. The increase in reserves was mainly due to increased accretion and moderation in the rate of depletion”, he said.
Mr. Emefiele noted that inadequate gas supply to electricity generating plants remained an impediment to the realization of the full benefits of the recent privatization of the power sector. He, therefore, urged collaborative efforts by both the government and private sector players in the industry, as well as, good spirited Nigerians towards ensuring that Nigerians reaped the benefit of the exercise. The apex bank retained the Liquidity Ratio at 30 per cent. It also retained the public and Private Sectors’ Cash Reserve Requirement at 75.0 per cent 15.0 per cent, respectively.
