The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has voted unanimously to retain the benchmark interest rate (MPR) at 11.5%, whilst keeping all other monetary parameters constant.
This was disclosed by the CBN Governor, Godwin Emefiele, while reading the communique at the end of the 282nd Monetary Policy Committee meeting on Tuesday, 23rd November 2021.
The MPC stated that its policy over the previous months has begun to show results, owing to the 4.03% growth in real GDP and the 6th consecutive monthly decline in headline inflation. The governor noted the continued moderation in the headline inflation, which he attributed to a marginal decline in the food and core components of the inflation index in October 2021.
Highlights of the Committee’s decision
- MPR retained at 11.50%.
- The asymmetric corridor of +100/-700 basis points around the MPR was retained.
- CRR was retained at 27.5%.
- The liquidity Ratio was also kept at 30%.
The overall outlook of the Nigerian economy according to the MPC indicates a continuous rebound in economic growth, which is supported by monetary and fiscal policies and stability in the price of crude oil.
The committee also noted the impact of increased vaccination in the effort to ensure economic growth in the country. In the same vein, the governor expects Inflation to continue to ease towards the end of the year.
Reasons behind its decision to hold
The apex bank opined that since its prior decisions to hold on to existing monetary policy rates have aided economic growth there was no reason to change course.
“As for whether to hold its existing stance, MPC believes that the existing monetary policy stance has supported the growth recovery and should be allowed to continue for a little longer for consolidation to achieve the MPC
mandate of price stability that is conducive for sustainable growth. The Committee also feels that a hold stance will enable it to carefully appraise the implications of the unfolding global development around policy tapering and normalization by advanced economies.”