The Central Bank of Nigeria has retain its monetary policy parameters by maintaining the monetary policy rate (MPR), at 11.5 percent and the asymmetric corridor of +100/-700 basis points around the MPR.
The Central Bank of Nigeria Governor, Godwin Emefiele who disclosed this to journalists at the end of its 277 MPC meeting in Abuja said the committee in charge of monitoring and moderating of the monetary policy indices agreed to leave the policy rates unchanged.
He said the committee agreed with a unanimous vote by its members to retain the lending rate by commercial banks as the committee also maintain the cash reserve ratio (CRR) at 27.5 percent and the liquidity ratio at 30 percent.
The CBN Governor said the Committee was confronted with a policy dilemma to either aggressively combat the growing inflationary pressures on the economy or support measures to stimulate growth and reverse the current recession.
Mr. Emefiele said although the country’s economy is currently in a stagflation environment with simultaneous inflationary pressures and contracting outputs, the MPC resorted to focus on efforts to reverse both developments as well as continue pursuing price stability in a growing economy.
He said the committee was of the view that whereas there may be wisdom in loosening the monetary policy rates, considering the growing impact of the global COVID-19 pandemic which has constrained economic growth, resulting in disruptions to supply chains and suppression of aggregate demand, an accommodating stance was necessary at this time to stimulate credit expansion and boost recovery in the short-term.
The Governor also said the Committee was also of the view that an expansionary monetary policy would enable the CBN and the monetary authorities to convince financial institutions to reduce loan pricing and defer interests on principal repayments to critically affected obligors in a sustainable manner.
The National Bureau of Statistics (NBS) put the current inflation rate in Nigeria at about 15.75 percent as at December 2020.
