The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele has announced retention of the country’s Monetary Policy Committee Ratio (MPR) at 11.5 per cent.
The Governor made this known during the banks 133rd Monetary Policy Committee (MPC) meeting.
Part of the resolution reached was the retention of the Cash Reserve Ratio (CRR) and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.
Acccording to Emefiele, the meeting of the committee focused more on how to exit recession caused by coronavirus pandemic.
“The meeting was focused not only on price stability but also on the need to speedily take actions to exit the recession.
“In view of these considerations, the choices before the committee were focused on whether to tighten the stance of policy to address rising price levels recognising its primary mandate of price stability; to ease to support output recovery; or to hold to allow existing policy initiatives to permeate the economy.
“The committee noted that although the appropriate response to rising inflationary pressure will be to tighten the stance of policy in order to moderate upward pressure on prices, it nevertheless feels that doing this will exert downward pressure on the recovery of output growth,” he said.
The said that expansion of credit facilities to the economy would boost production and increase consumer spending.
“To the committee, tightening is therefore not the appropriate response at this time.
“With the economy, whereas MPC feels that government spending and bank’s expansionary stance will be desirable to support recovery and guide the economy out of recession, it feels loosening will trigger excess liquidity and worsen the inflationary pressure.
“MPC also felt that excess liquidity may impact demand pressure and fuel further depreciation of the naira.
“With respect to a hold position, the committee was of the view that this will be beneficial as it will allow current policy measures to permeate the economy while observing the trend of developments,” he said.