The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) has voted to retain the monetary policy rate at 11.5 percent.
The committee also retained the liquidity ratio at 30 per cent and cash reserve ratio (CRR) at 27.5 per cent.
CBN Governor, Godwin Emefiele, who announced the committee’s decision on Tuesday at the end of a two-day meeting at the CBN headquarters, noted that the economic recovery is “still fragile.”
“The MPC made the decision to hold all policy parameters constant. Committee thus decided by a unanimous vote to retain monetary policy rate at 11.5%.
“MPC voted to retain assymetric corridor +100 -700 basis points. It also voted to retain cash reserve ration at 27.5% and retain liquidity ratio at 30%,” Emefiele said.
The committee’s decision implies that interest rates for loans will remain as it is since September 2020, when the MPC reduced MPR by 100 basis points from 12.5 per cent to 11.5 per cent.
In May 2020, the MPC had reduced the monetary policy rate to 12.5 per cent from 13.5 per cent.
At the time, cash reserve ratio (CRR) was retained at 27.5 per cent, liquidity ratio at 30 per cent and asymmetric corridor around the MPR at +200/-500 basis points.
Emefiele noted that although a GDP increase was recorded, the economy recovery from inflation in 2021 remains fragile.
“In the view of the MPC, although the economy has recovered from recession, the recovery was very fragile given that the GDP of 0.51% was still far below population growth rate.
“The committee therefore was of the view that there is a strong need to consolidate on all administrative measures currently being taken to spur output growth,” he said.
The CBN Governor added that the MPC urged the Federal Government to address the challenge of insecurity and infrastructure deficit.
He said the challenge will hamper the apex bank’s credit facility to households, micro small and medium enterprises, agricultural sector, among others.