Wednesday, 24 May 2017

CBN MONETARY POLICY COMMITTEE RETAINS BENCHMARK INTEREST RATE AT 14 PERCENT

cbn governor
Godwin Emefiele, CBN Governor
The Governor of the Central Bank of Nigeria, Godwin Emefiele, announced today that its Monetary Policy Committee (MPC) has retained benchmark interest rate at 14 percent, as expected by various analysts.

Emefiele said the Committee decided not to alter its policy stance given the noticeable improvements in the inflation rate, the foreign exchange market, and the Nigerian Stock Exchange during the period under review.

“The MPC was of the view that whereas the downward trend in inflation is a welcome development, the rate was still significantly above the policy reference band,” Emefiele said. “Committee is particularly pleased with the gradual retreat in inflation, the relative stability in the naira exchange rate across all segments of the market and the improved prospect of foreign inflows.”

The CBN’s decision came hours after the National Bureau of Statistics reported that Nigeria’s economy contracted by 0.52 percent in the first quarter of 2017, the fifth consecutive quarter of negative GDP growth, due to high inflation. The inflation rate has, however, been trending downwards from 18.72 percent in January 2017 to 17.24 percent in April.

“The committee was also concerned that loosening will exacerbate inflationary pressure and worsen the gains so far achieved in exchange rate of the naira. It was also convinced that loosening will further increase the negative interest rate,” the CBN Governor said.

Emefiele also announced that the Committee voted to retain cash reserve ratio at 22.5 percent, liquidity ratio at 30 percent, and the asymmetric corridor around the benchmark rate at plus 200 and minus 500. (Financial Nigeria)