The Central Bank of Nigeria (CBN’s) Monetary Policy Committee (MPC), yesterday, again voted to retain the monetary policy rate (MPR), which measures interest rate, at 11.5%.
Addressing journalists after the MPC’s first meeting for the year, the CBN Governor, Godwin Emefiele, said the Committee members unanimously retained key rates, which has been the trend throughout 2021.
Accordingly, the key lending rate was kept at 11.5%, the Cash Reserve Ratio (CRR) at 27.5%, Liquidity Ratio, 30% with the asymmetric corridor of +100 and -700 basis points around the MPR and liquidity ratio at 30%.
Emefiele said: “The MPC feels a hold will signal its realisation of the fragility of the growth recovery and its sensitivity to emerging global and domestic uncertainties, hence, the need to sustain policy trajectory.
“After a careful balancing of the benefits and downsides of each policy ratio, the MPC decided to hold all policy parameters constant.”
He noted that the existing monetary policy stance has supported the growth recovery and should be allowed to continue for a little longer for consolidation to achieve the MPC’s mandate of price stability that is conducive for sustainable growth.
He added that this trend will also enable it to carefully appraise the implications of the unfolding global development around policy tapering and normalisation by advanced economies.
The MPC feels a hold will signal its realisation of the fragility of the growth recovery and its sensitivity to emerging global and domestic uncertainties, hence, the need to sustain policy trajectory.
Inflation rate
The MPC also observed that inflation in most developed and emerging economies remains high, driven by persistent exchange rate fluctuations and supply bottlenecks.
It attributed the increase in Nigeria’s inflation rate (15.63%) in December 2021 to increased demand during the Yuletide, suggesting that the uptick could be a temporary development.
As a result, MPC members believe the inflation will moderate further going into the year, driven mostly by the significant interventions in the agricultural sector.
Just as they expect the Nigerian economy to continue with positive growth following the impressive growth recorded in the third quarter of 2021, reflecting continuous recovery from the recession.
eNaira adoption
Meanwhile, Emefiele maintained that Nigerians are gradually adopting the eNaira, launched three months back, saying that Person-to-Bank and Bank-to-Person transactions accounted for 90% of transactions done on the eNaira speed wallet.
He said: “Since its launch about three months ago, Nigerians have continued to gradually adopt eNaira as a fast and reliable means of exchange.
”Transactions recorded range from P-to-P, that is, Person-to-Person; or Person-to-Merchant; Bank-to-Person; Person-to-Bank; Bank-to-Merchants; and Merchants-to-Bank.
“The Person-to-Bank and Bank-to-Person constitute 90% of what we see in the market, and as you will observe, we spent the last three months observing and monitoring the system and addressing issues mostly around initial onboarding.”
