Nigeria retains monetary policy rate at 14 per cent

Imprimer

Abuja, Nigeria, November 21 (Infosplusgabon) - Nigeria’s Monetary Policy Committee (MPC) has for the eighth consecutive time retained the monetary policy rate at 14 per cent due to persistently uncertain economic conditions and high inflation.

Central Bank of Nigeria (CBN) Governor Godwin Emefiele told journalists after Tuesday’s  meeting of the MPC for the year 2017 in Abuja that nine members were present at the meeting and while eight voted to retain the MPR and other monetary indices, one voted to reduce the MPR by 100 basis points.

 

According to Emefiele, this means that the cash reserve ratio still remained 22.5 per cent and liquidity ratio, 30 per cent. Also, the Asymmetric corridor is at 200 and -500 basis points around the MPR.

 

“While tightening will strengthen the impact of monetary policy on inflation with complementary effect on capital flows and exchange rate stability, it nevertheless could also dampen the positive outlook for growth," he said.

 

"On the other hand, loosening may strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing; it would nonetheless aggravate the upward trend in consumer prices and exchange rate pressures.

 

“On the argument to hold, the committee believes that key variables have continued to evolve in line with the current stance of macroeconomic stability policy and should be allowed to fully manifest.”

 

Emefiele said that the committee expressed satisfaction with the slow but gradual growth in the economy, which has begun to show strong signs of recovery as public investment has picked with increased housing construction at the Federal and state levels as well as rising at the ports to support the purchasing manager index.

 

"The committee was, however, of the view that policy makers must not relent in their aggressive policy initiatives aimed at continuing the positive growth trajectory. The committee affirms its commitment to maintaining price stability which is crucial to sustainable economic growth and development,” he said.

 

Emefiele commended the fiscal authorities for the early submission of the 2018 Appropriation bill for consideration. He said that if approved on time, it would help reposition the economy on the path to growth.

 

“On financial stability, the committee noted the concentration of non-performing loans in some sectors, but observed that the overall outlook for the banking system was stable as deposit money banks’ balance sheets remain strong," he said

 

A research analyst at FXTM, Mr Lukman Otunuga, said that “with GDP growth in the third quarter rising by 1.40%, it seems that the central bank is hesitant to take action anytime soon. I believe that Nigeria’s improving economic landscape, and signs of inflationary pressures easing, are likely to support investor expectations of a rate cut.

 

"With inflation in Nigeria at 15.91%, there is a suspicion that the CBN may be waiting for a more sustained decline before moving ahead with rate cuts to support economic growth. As the year comes to an end, investors will continue to observe Nigeria’s hard economic data and inflation figures for hints as to when the CBN might act in 2018.”

 

 

FIN/INFOSPLUSGABON/PLM/ GABON 2017

 

 

 

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