CBN keeps up battle against inflation, retains key interest rate at 11-year high

The Central Bank of Nigeria (CBN) monetary policy committee (MPC) on Tuesday, sustained all monetary policies parameters, in a bid to keep up the battle against inflation.

MPC said inflation was down, year-on-year, but the food index rose in February from figures recorded in January, mounting pressure on consumers.

Godwin Emefiele, governor of the bank, announced that the committee decided to keep key interest rate at 14 percent, while cash reserve ratio (CRR) and liquidity ratio were held at 22.5 percent and 30 percent respectively.

He said the nine of 10 members present at the meeting decided unanimously to keep the asymmetric corridor at +200 and +500 basis points.

“Headline inflation however declined for the first time in 15 months, dropping by 0.94 percent to 17.78 percent in February from the 18.72 percent recorded in January 2017 and 18.55 percent in December 2016, seemingly a reverse in the monthly upward momentum recorded since January 2016,” he said

“The moderation in headline inflation in February 2017, reflected base effects as well as decline in the core component from 17.9 percent in January to 16.0 percent in February 2017.

“The food index however rose to 18.53 percent in February, a 0.71 percent point increase from the 17.87 percent recorded in January, 2017.  Committee similarly observed a continuous upward trend in the month on month inflation rate.

“It noted the sustenance on the structural factors mounting pressure on consumer prices, such as high cost of power and energy, transport and production factors, as well as rise in prices of  imports.”

Emefiele said the committee noted that monetary policies aimed at boosting agriculture and driving down prices of food in the short term, are to be sustained.

The committee asked that the federal government carry out a speedy implementation of the Economic Recovery and Growth Plan.

“The committee remains optimistic that if properly implemented, the newly released economic recovery and growth plan coupled with innovative growth sectoral stimulation policies, would help fast-track economic recovery,” Emefiele said.

The monetary policy committee (MPC) concluded that the era of high oil prices is gone, and it has become more imperative for government to diversify the economy away from oil.