The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has retained the Monetary Policy Rate (MPR) or lending rate of 12 per cent. The Central Bank Governor, Mr Godwin Emefiele, made this known when he briefed newsmen on the outcome of the MPC meeting in Abuja.
Emefiele said that the 12 per cent retention was a unanimous decision of the committee.
“The committee decided by a unanimous vote to retain the current stance of monetary policy with one member voting for an asymmetric corridor around the MPR. “Consequently, the Monetary Policy Committee voted to retain the MPR at 12 per cent with a corridor of plus-minus 200 basis points around the midpoint. The committee also retained the liquidity ratio at 30 per cent, while Public Sector Cash Reserve Requirement and Private Sector Cash Reserve Requirement, was retained at 75 and 15 per cent, respectively,’’ he said.
Emefiele said that the committee was satisfied with relative stability in the macro-economy as reflected in the impressive growth rates, stable consumer prices and exchange rate. According to him, the committee is concerned about the weak translation of stability to macroeconomic gains in employment and access to finance by Small and Medium Scale businesses.
“It, therefore, emphasised the need for MPC decisions to take into account the long run impact on unemployment level, wealth creation and growth of businesses.
“The committee noted that potential of power sector to stimulate output growth through enhanced investment and spill over effect in employment generation if challenges in sector are effectively addressed,’’ he added.
The CBN governor said the committee noted that gas to power remained a binding constraint in reaping the benefits of the recently concluded power sector reforms.
He added that the committee further expressed concern about the liquidity level and the tendering uptick in inflation. Emefiele said this might not be connected with poor harvest in some agricultural producing areas, particularly in the North-East and North-Central states of the country.
“The committee welcomed the moderation in the rate of depletion in external reserves in recent months. The reserve accretion needed to improve much faster to provide a strong resilient buffer to fiscal operations. The committee, however , said that a gradual reduction in the country’s import bills through domestic production of some of the major food imports should be a key element in the overall reserve accretion strategy,’’ he said.
On Inflation, he said the committee noted that the policy direction for inflation, exchange and interest rate must be seen not only in the context of price and financial stability.
The governor said that the policy should also help to enhance the quality of life of Nigerians and promote employment generation.
On external sector development, Emefiele said that all segment of the foreign exchange market witnessed a considerable degree of stability during the period.
“The exchange rate at the retail-Dutch Auction Segment (rDAS) of the market was flat at N157.29 to a dollar. At the inter-bank market, the selling rate opened at N162.20 to a dollar and closed at N162.95, representing a depreciation of 0.46 per cent.
“Consequently, at the Bureaux de Change (BDC) segment, the exchange rate opened at N167.00 to a dollar and closed at N168.00 to a dollar, representing a depreciation of N1.000 or 0.6 per cent. He said that gross official reserve rose to 40.20 billion dollars by July 18 from 37.31 billion dollars as at end of June 2014. He attributed the increase in reserve to increase accretion and moderation rate of depletion.
