CBN holds interest rate to avoid exchange rate pressure

The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) has retained the monetary policy rate at 14 percent.

The apex bank also left the cash reserve ratio (CRR) at 22.5 percent.

Godwin Emefiele, governor of the CBN, made this known on Tuesday while announcing the decision of the committee in Abuja.

Emefiele said only one of the nine members of the committee voted against the decision.

The committee advised policymakers not to relent in their “aggressive initiatives aimed at continuing the positive growth”.

It also called for an early passage of the 2018 budget to “keep fiscal policy on track”.

According to the governor, the committee expressed concerns about the caution exercised by banks in lending money to customers.

“Tightening would strengthen the impact of monetary policy on inflation with complementary effects of capital flows and exchange rate stability, it could potentially dampen the positive outlook for growth and financial stability as this would constitute a risk in productive sectors of the economy,” he said.

“Loosening would strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing, it could aggravate upward trend in consumer prices and generate exchange rate pressures.

“The committee also felt that loosening would worsen the current account balance of the country through increased importation.”

Emefiele said key variables have been evolving with current policies and should be allowed to fully manifest.

This is the last MPC meeting for 2017 and is also the sixth time the committee will be maintaining the rates.