At the end of the Monetary Policy Committee meeting, the monetary policy rate for banks and businesses was retained at 14 per cent, while Cash Reserve Ratio (CRR) was left at 22.5 per cent and liquidity ratio at 30 per cent.
The CRR sets the specified minimum fraction of customers’ total deposits commercial banks can hold as reserves either in cash or deposits with the Central Bank.
At the post-MPC meeting briefing, the CBN governor, Godwin Emefiele, said in Abuja that the 10 members present at the meeting decided unanimously was kept within the symmetric window of +200 and -500 basis points around the MPR.
Emefiele, who said the economy was still in recession, said it was time government stepped up efforts to settle domestic indebtedness to states to help revamp the economy.
He said part of the efforts should include attempts to revamp some moribund industries that helped create jobs in the past, to create employment opportunities for young university graduates.
The CBN took this decision in July 2016, and has since decided to maintain all rates through 2016 and for the early portions of 2017.
For the second time in four months, the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) decided on Tuesday to hold benchmark interest rates at record high of 14 percent.
Godwin Emefiele, governor of the bank, announced that the committee also decided to keep cash reserve ratio (CRR) and liquidity ratio at 22.5 percent and 30 percent respectively.
He said the 10 members present at the meeting decided unanimously to keep the asymmetric corridor at +200 and +500 basis points.
Some experts are of the opinion that the fact that the nation is currently entangled in a fierce battle with cost-push inflation has created unease with concerns already heightened over the CBN running low on ammunition. It must be understood that the cause behind the incessant rise in consumer prices is the disparity between the official and black market exchange.
The analyst also pointed out that many producers in Nigeria do not have the ability to purchase the Naira on the official exchange and are forced to use the black market which inevitably will make the products more expensive.
“There is a possibility of the Central Bank of Nigeria accepting that the black market represents the true value of the Naira which should encourage further devaluations on the official exchange this year in a bid to reclaim stability.
“Although major financial institutions such as the IMF and World Bank have predicted that Nigeria may exit a recession this year, the nation still remains exposed to both external and internal risks which should keep the CBN on high alert.”