CBN Retains 11.5% Interest Rate, All Key Parameters

25 Nov CBN Retains 11.5% Interest Rate, All Key Parameters

Central Bank of Nigeria (CBN) has retained the benchmark interest rate (Monetary Policy Rate) at 11.5 per cent and left all other parameters unchanged in a meeting of its Monetary Policy Committee

CBN Governor, Godwin Emefiele announced the outcome of the meeting on Tuesday during the post-Monetary Policy Committee (MPC) briefing held virtually.

He said, “The Committee was of the view that this will be beneficial as it will allow current policy measures to permeate the economy while observing the trend of developments.

The Committee also felt that the heterodox policies of the Bank targeted at various sectors are showing positive results that would further engender growth.”

The CBN kept the asymmetric corridor, from +200/-500 to +100/-700 basis points around the MP, retained CRR at 27.5% and retained liquidity ratio at 30%.

On the parallel market, he said because the market is fuelled by corruption, it is not a credible market to hinge the true exchange rate position of the naira.

“People create panic by saying the exchange rate is N480/$1. But on our side, we will continue to insist that the exchange rate is determined by forces of demand and supply in the forex market.

“We don’t agree that the determining factor for the value of our currency should be based on the market that is tainted, a market where people go to offer bribes,” he said.

Emefiele explained that in taking the decision, the Committee focused not only on price stability, but also on the need to speedily take actions to exit the recession.

He said the CBN is optimistic the economy will post a little positive GDP from the fourth quarter 2020 and full recovery by first quarter 2021.

The Committee, however, noted that the rise in inflation will likely abate in the medium term, as domestic production is expected to recover, following the resumption of economic activities post-COVID-19 lockdown.

In addition to this, the CBN indicated that food inflation is expected to moderate as harvest season sets in.

The Committee recognized the supportive developmental roles of the CBN towards addressing some of the structural issues in the economy.

Emefiele, also said the bank would raise its COVID-19-targeted facility from N150 billion to N300 billion in order to accommodate more Nigerians in a bid to cushion the impact of the pandemic that has pushed the nation’s economy into its second recession in five years.