The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has unanimously agreed to hold all parameters and thus decided to retain the Monetary Policy Rate (MPR) at 27.50 percent with the asymmetric corridor around the MPR at +500/-100 basis
points.
The MPC also retained the Cash Reserve Ratio (CRR) of Deposit Money Banks at 50.00 percent and Merchant Banks at 16 percent, while keeping the Liquidity Ratio (LR) at 30.00 percent.
The MPC, thus, encouraged security agencies to sustain the momentum, while the government provides necessary inputs to farmers to further boost food production.
The Committee, however, acknowledged underlying inflationary pressures driven largely by high electricity prices, persistent foreign exchange demand pressure, and other legacy structural factors.
According to Cardoso, the MPC noted new policies introduced by the Federal Government to boost local production, reduce foreign currency demand pressure, and thus lessen the pass-through to domestic prices.
“Given the relative stability observed in the foreign exchange market, Members urged the Bank to sustain the implementation of the ongoing reforms to further boost market confidence.
“The Committee also called on the fiscal authority to strengthen current efforts at enhancing foreign exchange earnings, especially from gas, oil, and non-oil exports,” Cardoso stated.
The MPC, however, expressed concerns about the recent decline in crude oil prices, attributable to increased production by non-OPEC members as well as uncertainties associated with U.S. trade policy, which present new challenges for fiscal receipts and budget implementation.
Cardoso pointed out that the Committee reaffirmed the continued stability of the banking system following notable improvements in key performance indicators and observed the appreciable progress in the ongoing recapitalization exercise. Members, thus, called on the Bank to sustain its effective oversight of the industry to ensure compliance with regulatory and macroprudential guidelines.
The CBN Governor explained that on the strength of these considerations, and driven by the continued uncertain policy environment, exacerbated by ongoing global shocks, members weighed the available policy options and were unanimous in their decision to hold policy to enable a better understanding of near-term developments.
He stated that Members reaffirmed their commitment to prioritise policies targeted at anchoring inflation expectations and easing exchange rate pressure.
Credit: Nigerian Tribune