CBN monetary policy Committee holds benchmark rate at 12.5%, other rates

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), has retained Monetary Policy Rate (MPR) at 12.5 per cent and held all other policy parameters constant.

The CBN Governor, Mr Godwin Emefiele said this while reading the communique after the MPC meeting in Abuja. Emefiele said that the committee retained the asymmetric corridor of +200/-500 basis points around the MPR.  Emefiele said eight of the 10 committee members voted to retain the rate and two voted for a rate cut. In May the bank unexpectedly cut the rate by 100 basis points to 12.5 per cent from 13.5 per cent. It was the largest rate cut since 2015. 

Emefiele said “The committee was mindful of the cut in policy rate at the last MPC meeting and the need to allow time for its effect to permeate the economy”. Emefiele said the rate cut was having a “positive impact” as credit growth had increased significantly in the economy. He said the MPC also retained the Cash Reserves Ratio (CRR) at 27.5 per cent as well as Liquidity Ratio at 30 per cent. “As a result, the Committee noted that the earlier downward adjustment of the MPR by 100 basis points to 12.5 per cent to signal the loosening monetary policy stance is yielding positive impact as credit growth increased significantly in the economy. The Committee also noted the positive impact of the various fiscal and monetary interventions on households, SMEs and manufacturing sectors. “The MPC also noted that increasing MPR at this stage will thus be counter-intuitive and will result in upward pressure on market rates and cost of production,” he said.