BUSINESS
MPC: CBN retains economic indices for seventh consecutive time
As projected by financial experts that the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) will keep rate at current level, the committee has again left all economic indices unchanged for the seventh consecutive period.
The apex bank retained the Monetary Policy Rate (MPR) at 14 per cent, Cash Reserve Ratios (CRR) for commercial banks at 22.5 per cent, the Liquidity Ratio (LR) at 30 per cent, Asymmetry corridor at +200 and -500 basis point.
The committee latest decision indicated that the benchmark lending rate that was retained at 14 per cent and all other parameters at their current levels for 12 months running. Economists projections exclusively published by the Daily Times Newspaper earlier this week predicted that the MPC would keep major indices unchanged.
Although, Governor, CBN, Mr. Godwin Emefiele, has said that the decision is based on the need to halt the inflation rate while also controlling growth. According to him, the MPC sees the slow implementation of the 2017 budget as a challenge, calling on the fiscal authorities to speed up the process in line with the Economic Recovery and Growth Plan (ERGP).
He said, “The inflation rate is at 16.10 per cent as at June, which was 0.15 per cent points lower than the rate recorded in May. This represented the fifth straight decline in the rate of inflation since January 2017. These are indications that the economy is showing strong signs of recovery.”
Considering high inflation rate currently at 16.1 percent in June, coupled with the continuous effort by the apex bank in mopping up liquidity from the system through incessant sales of Treasury bills and other market securities, financial analysts, had predicted that the MPC would keep rate at current levels.
In view of this, Economists and financial analysts opined that there is high likelihood that the committee may not tamper with any of the economy indices. The Managing Director/CEO, Cowry Asset Management Limited, Mr. Johnson Chukwu, explained that due to the high inflation rate at 16.1 per cent, the committee may not be able to make any changes in the economic indices. Although, he pointed out that the inflation rate target is about 11 per cent, which may not allow them to adopt an accommodating monetary policy.
According to him, the Central bank has been busy mopping up liquidity from the market system through the sales of Treasury bills and sometime through other securities. So, the MPC may not be able to conflict the actions of the CBN by injecting liquidity through an accommodating monetary policy.
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