Members of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) have voted to retain the record-high benchmark interest rate at 14 percent.
The MPC resumed meeting after more than two months in abeyance following the inability of the Senate to confirm new members appointed into the committee by President Muhammadu Buhari.
According to Godwin Emefiele, governor of CBN, who addressed a press conference in Abuja on Wednesday, the MPC unanimously voted to retain key rates, with Aishah Ahmad, Edward Adamu, and the three other newly confirmed in attendance .
This is the first time Ahmad and Adamu, the recently confirmed deputy governors of CBN; and two other members confirmed by the senate — Adeola Adekinju, Robert Asogwa, and Aliyu Sanusi — are voting as part of the MPC.
The decision to raise the key interest rate to 14 percent was made in July 2016 and has been kept at the same level since then. At 14 percent, Nigeria’s MPR is currently at its highest in at least 12 years.
Emefiele said the decision to retain the policy rates was geared at fighting inflation and strengthening the economic outlook for Nigeria’s growth.
“Committee was of the view that further tightening would strengthen the impact of monetary policy on inflation with complementary positive effect on capital flows and exchange rate stability,” he said.
“Nevertheless, it could potentially dampen the positive outlook for growth and financial stability. Committee is of the view that loosening will strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing.
“This may, however, lead to a rise in consumer prices, generating exchange rate pressures on the currency in the process.
“The committee believes that key variables have continued to evolve in line with the current stance of macro-economic policy and should be allowed more time to fully manifest.
“In consideration of the foregoing, committee decided unanimously by a vote of all members present to retain monetary policy rate (MPR) at 14 percent alongside all other policy parameters.
“Consequently, MPC voted unanimously to retain MPR at 14 percent, CRR (cash reserve ratio) at 22.5 percent, liquidity ratio at 30 percent, and asymmetric corridor at +200 basis points and -500 basis points around the MPR.”
Emefiele said the new members did not decide to go with the previously-held decisions of the CBN because they are “a strong set of people, who understand their responsibilities and have decided to hold positions for now”.
The new deputy governors were assigned their portfolios; Adebayo Adelabu is deputy governor operations, while Joseph Nnanna is deputy governor economic policy.
Ahmad and Adamu were designated for financial system stability and corporate services, respectively.
The MPC meeting which was originally scheduled for January 22 and January 23 is the apex bank’s first official meeting in 2018, following senate’s confirmation of the presidential appointees.
