CBN retains interest rate at 14%, seeks speedy budget implementation

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

Godwin Emefiele, CBN governor, announced the committee’s decision at the end of its 263rd meeting held at the bank’s headquarters in Abuja on Tuesday.

The MPR has been set at a record high 14 percent since July 2016 to combat rising inflation.

According to Emefiele, seven members of the MPC agreed to maintain the current monetary policy rate while three voted for its increase.

The committee also sought the speedy implementation of the 2018 budget.

MPC retained the cash reserves ratio and liquidity ratio at 22.5 percent and 30 percent respectively, while the asymmetric window was left at +200 and -500 basis points around the MPR.

The CBN governor said Inflation pressures would keep increasing, resulting from increased spending in the months leading to the 2019 general election.

He said the committee was concerned that the country’s exit from recession “may be under threat,” noting that the “economy slowed by 1.95 percent and 1.50 percent during the first and second quarter of 2018 respectively”.

Emefiele urged government to take advantage of rising oil prices to rebuild its fiscal buffers, strengthen its finances in the medium term and ensure a sustained implementation of the 2018 budget.

“The near term offside risks to inflation remains the dissipation of the base effects, expected 2019 election spending, continued herdsman attack on farmers and the current episode of flooding which destroys crops and affects food supply and prices ultimately,” he said.

“In this regard, the committee urged the fiscal authorities to ensure sustained implementation of the 2018 budget to relieve the supply side growth constraint, as well as address the flooding incidents which has become perennial on a permanent basis.”