Two Years On, CBN Holds Benchmark Interest Rate At 14%
In July 2016, the Monetary Policy Committee of the Central Bank of Nigeria, CBN raised benchmark interest rates (the Monetary Policy Rate) by 200 basis points from 12 to 14%.
Since then, the MPC had retained the MPR at 14%.
It had been hoped that the MPC will reduce the MPR this year especially with consecutive decline in inflation which stood at 11.23% as at June 2018.
In fact, the CBN governor, Godwin Emefiele had promised that the interest rate should come down as inflation remains on the decline.
It is not clear how when that will happen as the MPC on Tuesday left the MPR unchanged at 14%.
Emefiele, announced the decision of the committee at the end of a two-day meeting held at the apex bank’s headquarters in Abuja.
He explained that members of the committee agreed to maintain the current monetary policy stance.
In addition, the committee also retained the Cash Reserves Ratio at 22.5%.
Also retained are the Liquidity Ratio which was left at 30%; and the Asymmetric Window which was left at +200 and -500 basis points around the MPR.
Meanwhile, the MPC noted that the external reserves stood at $47.2 billion on July 23, 2018, and said it was optimistic and expected further increases in the level of external reserves in the near term, citing the favourable crude oil prices.
The Committee, therefore, advised the CBN to sustain its current efforts to maintain investor confidence and ensure accretion to external reserves.
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