…as Reserves hit $50b
By Emma Ujah, Abuja Bureau Chief
The Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR) at 26.5 percent, along with other monetary rate parameters.
Briefing the media on the outcome of the 305th Monetary Policy Committee (MPC) committee, in Abuja, yesterday, the Governor of the CBN, Mr. Olayemi Cardoso, said the Standing Facility Corridor around the MPR was subsequently left at +50/-450 basis points.
The Cash Reserve Requirements (CRR) was also retained at 45% for deposit money banks, 16% for merchant banks, and 75% for non-TSA public sector deposits.
Reasons for retaining rate Justifying the decisions of the MPC, Mr. Cardoso said they were anchored on a comprehensive assessment of risks to the outlook.
He stated: “Although inflation has risen marginally for two consecutive months, largely induced by external shocks, the MPC recognised its transitory nature and remain confident that the current macroeconomic environment is sufficiently robust to support a return to disinflation.
“In reaching its decisions, the MPC particularly noted the spillovers from the Middle East crises, which have exerted upward pressure on energy prices, cost of transportation, and other logistics.
“However, available evidence indicates that the impact of the crisis on the Nigerian economy has been largely muted due to the benefits of prior policy reforms.
“These include: exchange rate stability; improvements in external reserve buffers; strengthened monetary policy transmission; well-capitalized banking system; ongoing fiscal consolidation- which have significantly bolstered the economy’s ability to absorb external shocks. “As a result, the pass-through of global commodity and energy price shocks to domestic inflation has been significantly mitigated and would have been more pronounced in the absence of these reforms.
“The MPC was, therefore, convinced that the essential conditions for price stability remain firmly in place.
“Members were, therefore, of the view that a cautious and vigilant policy stance is necessary to anchor inflation expectations and safeguard macroeconomic stability.”
Reserves hit $50b
Cardoso disclosed that the nation’s Foreign Reserves stood at $49.49 billion, nearing the pre- Middle East crisis period level.
He expressed optimism that the reserves with the capacity to accommodate nine months of import would bolster investor confidence in the Nigerian economy, which he described as having a positive outlook expected to remain resilient.
He said the outlook showed there could be a moderate increase in inflation in the near-term due to external shock but that it would be temporal and that with enhanced food supply stable exchange rate and other reforms, of both monetary and fiscal authorities, the economy would witness the much-expected growth.
No FX market intervention
He also said there no CBN intervention in the Foreign Exchange (FX) market as he maintained that market was already deep enough to operate on its own.
He explained, “What we have done is to meet the needs of loans repayment or needs of various government agencies. As we do this, so funds also flow in.”
On the recently concluded banking recapitalization, the CBN boss said his team would remain proactive and adopt necessary measures to address potential post-recapitalization risks towards preserving financial system stability.
He said that the banks which had not met the recapitalization requirements due to regulatory and legal issues would be provided an allowance to do so, while ensuring financial systems stability.
Article CBN retains rate at 26.5 %, says no FX market intervention Live On NgGossips.
