The Central Bank released its Monetary Policy Communique today revealing that it was going to stick with 11% for Monetary Policy Rates (rates at which it lends money to banks), Cash reserve requirement (CRR) at 20% (amount of deposits banks cannot lend out) and liquidity ratio of 30%. Whilst the three decisions above are an important part of the MPC communique, analysts and observers were hoping for more. Though, most analysts surveyed by Nairametrics had anticipated nothing in the are of devaluation some still kept hopes that the CBN could spring a surprise. Unfortunately, that never happened as the CBN confirmed it was going to achieve a stable exchange rate regime.
The CBN however, did make some admissions in its communique that were quite instructive; Here they are;
Oil price is not going up soon – Contrary to the optimism expressed by the government and the Minister for Petroleum, Dr Ibe Kachikwu that oil prices will rise, the CBN believes we are in for a long run
However, the current episode of lower oil prices is projected to remain over a very long period. Consequently, it is imperative to brace up for a longer period of low government revenues from oil sources, which would necessitate hard and uncomfortable choices as the economy transits to more sustainable sources of revenue, consistent with the economic realities and strategic objectives of the country. In the circumstance, certain tradeoffs must be envisaged and duly accommodated.
The CBN will loosen controls – While some may not agree, we believe the CBN will rather float the naira than devalue it. It has introduced a managed float exchange rate system but that hasn’t worked considering the controls we have in place. However, the communique indicates that they might consider loosening a lot more restrictions as things improve.
The Bank is finetuning the framework for foreign exchange management with a view to ensuring a more effective and liquid foreign exchange market, taking into account Nigeria’s strategic development priorities; with the policies being designed within an environment of regularly ensuring consistency with monetary and fiscal policies.
It’s all about selective lending – The CBN is still pushing for lending to sectors it considers critical to national development regardless of whether they are worth being funded or if they are just too risky. The bank will continue to arm-twist commercial banks into lending to these sectors.
the goal of increasing lending to key sectors of the economy is yet to be achieved as the Bank continues to adopt moral suasion to encourage the DMBs to support targeted lending to the real sector including agriculture, solid minerals and SMEs sub-sectors of the Nigerian economy
![[Corporate Action] PZ Cussons Profit Drops by 10% For 2015 Full Year](https://nairametrics.com/wp-content/uploads/2015/08/PZ-Guardian.jpg){kind=small}
