By James Emejo
The Central Bank of Nigeria (CBN) Tuesday resolved to to leave all monetary policy parameters unchanged in a continued effort to stimulate the economic growth.
The apex bank retained the Monetary Policy Rate (MPR) otherwise known as interest rate at 11.5 per cent with the assymetric corridor of +100/-700 basis points around the MPR.
It further retained the Cash Reserve Ratio (CRR) at 27.5 per cent as well as the Liquidity Ratio at 30 per cent.
The MPR is the rate which the apex bank lends to commercial banks and often determines the cost of funds.
Addressing journalists at the end of the 2-day meeting of the Monetary Policy Committee (MPC) – the last in 2020 – CBN Governor, Mr. Godwin Emefiele, said in arriving at its decision to hold monetary policy rates at current levels, the committee focused not only on price stability, but also on the need to speedily take actions to exit the recession.
He said the MPC was faced with options around whether to tighten the stance of policy to address rising price levels recognising its primary mandate of price stability; to ease to support output recovery; or to hold to allow existing policy initiatives to permeate the economy.
He said: “The committee noted that, although the appropriate response to rising inflationary pressure would be to tighten the stance of policy in order to moderate upward pressure on prices, it nevertheless, felt that doing this would exert downward pressure on the recovery of output growth.
“The Committee also felt that tightening would negate the Bank’s desire to expand credit to the real sector at affordable terms, not only to boost production, but also to increase consumer spending. To the Committee, tightening was therefore not the appropriate response at this time.”