CBN keeps same interest rate through 12 months of recession

The monetary policy committee of the Central Bank of Nigeria (CBN) has retained monetary policy rate (MPR) at 14 percent and all other parameters at their current levels for 12 months running.

On July 26, 2016, the committee voted to raise MPR from 12 percent in May, 2016 to 14 percent — the highest in at least 10 years.

It also decided that the cash reserve ratio (CRR) and liquidity ratio be maintained at 22.5 percent and 30 percent respectively.

“The MPC was further concerned that while the situation called for obvious tightening of the monetary policy stance, the technical recession confronting the economy and the prospects of negative growth to year-end needed to be factored into the policy parameters,” Godwin Emefiele, governor of the CBN, had said in 2016.

Holding the same stance a later, the CBN has effectively held on to the same interest rate of 14 percent through out the country’s latest economic recession, which was confirmed in August 2016.

While addressing the press in Abuja, after the MPC meeting on Tuesday, Emefiele said the committee decided to hold rates, hinging the bank’s decision on the need to halt inflation while also supporting growth.

The committee lamented insecurity in the Niger Delta, in the north-east and across regions where pockets of herdsmen activities remain violent.

Emefiele said the MPC sees the slow implementation of the 2017 budget as a challenge, calling on the fiscal authorities to speed up the process in line with the economic recovery and growth plan (ERGP).