26 Jan CBN Retains Monetary Policy Rate At 11.5%, expects inflation to moderate
The monetary policy committee of the Central Bank of Nigeria, (CBN), has voted to retain the monetary policy rate (MPR), which measures interest rate at 11.5 percent, with the asymmetric corridor of +100 and -700 basis points around the MPR and liquidity ratio at 30 percent.
The monetary policy rate is the baseline interest rate in an economy, every other interest rate used within an economy is built on the MPR.
Addressing journalists on Tuesday after the first meeting of the Monetary Policy Committee for the year at the CBN headquarters in Abuja, CBN Governor, Mr Godwin Emefiele, said the committee members unanimously retained key rates.
“The MPC feels a hold will signal its realisation of the fragility of the growth recovery and its sensitivity to emerging global and domestic uncertainties. Hence, the need to sustain policy trajectory,” Emefiele said.
“After a careful balancing of the benefits and downsides of each policy ratio, the MPC decided to hold all policy parameters constant.”
He 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 remains high, driven by persistent exchange rate fluctuations and supply bottlenecks.
In December 2021, surging food prices pushed inflation to 15.63 percent — the first increase after 8 months of decline.
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 number should be a temporary development.
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.
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