The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), has voted unanimously to retain the Monetary Policy Rate (MPR) at 11.5%.
This was disclosed by the CBN Governor, Godwin Emefiele while reading the communique at the end of the MPC meeting on Tuesday 27th July 2021.
Highlights of the Committee’s decision:
- MPR retained at 11.50%
- The asymmetric corridor of +100/-700 basis points around the MPR
- CRR was retained at 27.5%
- While Liquidity Ratio was also kept at 30%
The committee expressed confidence that banks are doing the right thing in managing the country’s economic situation by increasing access to credit to the real sectors of the economy.
The MPC expressed delight that inflation had begun to trend downwards, while output growth had remained positive. The committee was of the opinion that there was a need to continue to put in place policy measures that will further and faster drive down inflation, while at the same time accelerate output growth to levels above the population growth rate.
Governor Emefiele highlighted that the Committee encouraged the Bank to continue the use of its intervention mechanism to deploy funds to output-stimulating and employment-generating sectors of the economy, such as the Targeted Credit Facility, AGSMEIS, Agriculture and Manufacturing.
Outlook for the Nigerian economy
The overall outlook for both the global and domestic economies remains clouded with downside risks despite the upbeat forecast for a speedy recovery.
- These risks according to the communique of the MPC include lingering uncertainties surrounding the path to the termination of the Pandemic, as new and deadlier strains of the virus continue to pose a significant threat to the efficacy of the COVID-19 vaccines.
- Meanwhile, available data and forecasts for key macroeconomic variables for the Nigerian economy suggest a broad improvement for the rest of the year. This is hinged on continued progress with the containment of the Pandemic, as well as ongoing monetary and fiscal support.
- Notably, the Nigerian economy is expected to grow in 2021 by 3.15% (CBN), 3.0% (FGN), and 2.5% (IMF).
Why this matters
The monetary policy committee made the decision to hold all policy parameters constant, with the expectation that a hold stance will enable the continued permeation of current policy measures in supporting the recorded growth recovery and macro-economic stability.