In a decision that will see that the era of the 12 per cent interest rate continues, the Monetary Policy Committee (MPR) of the Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR) at 12 per cent, with a corridor of /- 200 basis points around the midpoint; the Cash Reserve Requirement was also retained at 12 per cent; and Liquidity Ratio remained at 30 per cent with the Net Open Position at one per cent.
Governor of the CBN, Mallam Lamido Sanusi, who read the communiqué at the end of the committee meeting, said it was faced with the options of increasing the rates in response to the uptick in headline and food inflation and pressure on exchange rates; reducing the rates in view of declining core inflation and GDP growth and retaining current monetary policy stance to sustain the gains of monetary policy, while utilising the existing space in the corridor to influence yields and exchange rates in the short term.
According to Sanusi, “The committee considered and rejected option one as being unnecessary, since there are no major inflationary concerns at this time. While acknowledging the merit of the arguments in favour of the second option, it was also rejected by the majority because it could send wrong signals of a premature termination of an appropriately tight monetary stance.
“The Committee, therefore, decided by a majority vote of nine:three to accept option three and maintain the current policy stance,” he said.