The Central Bank of Nigeria’s Monetary Policy Committee on Tuesday has agreed to leave the Monetary Policy Rate unchanged at 14 per cent.
The CBN Governor, Mr. Godwin Emefiele, who announced the decision of the committee at the end of a two-day meeting held at the apex bank’s headquarters in Abuja, explained that all the 10 members that attended the meeting agreed to maintain the current monetary policy stance.
Apart from the MPR which was retained at 14 per cent, the governor said the committee also voted to retain the Cash Reserves Ratio at 22.5 per cent.
Also retained are the Liquidity Ratio, which was left at 30 per cent; and the Asymmetric Window which was left at +200 and -500 basis points around the MPR.
Many analyst had predicted that the CBN will not tinker with the 14% benchmark bearing in mind that inflation rate for the month of October increased 18.3% from 17.9% in September.
At a public presentation in Lagos, Bismarck Rewane, CEO Financial Derivatives Company Limited had predicted that he does not expect a change in the interest rate bearing the posture of the CBN Governor “I don’t think anything will change. The central bank is just doing what many people do in times like this. Do not do anything. But that is worse than doing the wrong thing”, he said
Bismarck however believes that the CBN cannot continue to hold the rate saying “Between now and the end of the year, the reality will dawn on us”.
Nigeria has been plunged into a recession after the global oil price fell below 15 year price benchmark. The incessant destruction of oil installations in the Niger Delta has also disrupted the government earnings below original target in the 2016 budget.
Nigeria is yet to submit its 2017 budget before the Senate. The government has not also reached concrete agreement with the Niger Delta militants. The continuous scarcity of FX for local manufacturers will continue to increase food and major commodity prices.
Inflation has been predicted to near 20% before the year end. The road ahead for Nigeria needs a major policy shift that is currently lacking.