Monetary Policy Committee of the Central Bank of Nigeria has voted unanimously to retain the benchmark interest rate at 11.5%, whilst keeping all other monetary parameters constant.
This was disclosed by the Governor of the CBN, Godwin Emefiele, while reading the communique of the first monetary policy committee meeting of the year, on Tuesday 25th January 2022.
Highlights of the committee’s decision include the retention of MPR at 11.50%, the asymmetric corridor of +100/-700 basis points around the MPR was retained, CRR was retained at 27.5%,While Liquidity Ratio was also kept at 30%.
The MPC observed that inflation in most developed and emerging economies remain high driven by the persistent exchange rate fluctuations and supply bottlenecks.
The committee then advised the CBN to continue to use its development finance tools to accelerate output growth, which will also help in boosting manufacturing output that would ultimately aid moderation in prices.
It also requested the bank to continue its use of administrative measures, including discretionary tools at its disposal through CRR, to control money supply in the economy.
Emefiele said the committee believed that the existing monetary policy stance has supported the growth recovery and should be allowed to continue for a little longer for consolidation to achieve the MPC mandate of price stability that is conducive for sustainable growth.
The committee also felt that a hold stance would enable it to carefully appraise the implications of the unfolding global development around policy tapering and normalisation by advanced economies.
They observed that inflation in most developed and emerging economies remain high, driven by persistent exchange rate fluctuations and supply bottlenecks.
The committee noted that the increase in the country’s inflation rate in December 2021 is attributable to increased demand during the yuletide, suggesting that the uptick in the numbers could be a temporary development.
In December 2021, surging food prices push inflation to 15.63 percent — the first increase after 8 months of decline.
According to Emefiele, the members are of the view that inflation will moderate further going into the new year, driven by the significant interventions in the agricultural sector.
The CBN MPC highlighted that the Nigerian economy is expected to continue with positive growth following the impressive growth recorded in the third quarter of 2021, reflecting continuous recovery from the recession.