BREAKING: CBN Retains Benchmark Lending Rates

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), has retained the Monetary Policy Rate at 14 per cent, alongside other parameters.

The CBN Governor, Mr Godwin Emefiele, made this known while briefing journalists shortly after the two-day MPC meeting held on Tuesday at the apex bank’s headquarters in Abuja, the nation’s capital.

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Mr Emefiele also said the committee retained other monetary policy parameters such as the Cash Reserves Ratio at 22.5 per cent, Liquidity Ratio at 30 per cent and the Asymmetric Corridor at 200 basis points.

The CBN governor said only one of the nine members of the committee voted against the decision.

The key interest rate serves as the national lending rate in the country.

Emefiele said: “In arriving at its decision, the Committee appraised potential policy options in terms of the balance of risks. The Committee also took note of the gains made so far as a result of its earlier decisions; including the stability in the foreign exchange market and the moderate reduction in inflation and thus extensively deliberated the options regarding whether to hold, tighten or ease the policy stance.

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“While tightening would strengthen the impact of monetary policy on inflation with complementary effects on capital inflows and exchange rate stability, it nevertheless could also potentially dampen the positive outlook for growth and financial stability.

“On the other hand, whereas loosening would strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing, it could aggravate upward trend in consumer prices and generate exchange rate pressures.

“The Committee also feels that loosening would worsen the current account balance through increased importation. On the argument to hold, the Committee believes that key variables have continued to evolve in line with the current stance of macroeconomic policy and should be allowed to fully manifest.

“Members noted that the developments in output and inflation in particular required effective close monitoring in order to gain clarity on the medium term optimal path of monetary policy.

“In consideration of the foregoing, the Committee decided by a vote of 8 to 1 to retain the Monetary Policy Rate (MPR) at 14.0 per cent alongside all other policy parameters. One member voted to reduce the MPR by 100 basis points.

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“Consequently, the MPC voted to, retain the MPR at 14.0 per cent, retain the CRR at 22.5 per cent, retain the Liquidity Ratio at 30.0 per cent, and retain the Asymmetric corridor at +200 and -500 basis points around the MPR,” the CBN governor added.

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