The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday retained Monetary Policy Rate at 13.5 per cent and held other policy parameters constant.
The CBN Governor, Godwin Emefiele, said this during a national broadcast monitored by the News Agency of Nigeria in Abuja on Tuesday.
Emefiele stated that the committee also decided to retain Asymmetric Corridors of +200 -500 bp around the MPR as well as retained Cash Reserve Ratio (CRR) at 27.5 per cent and Liquidity Ratio at 30 per cent.
He explained that after weighing the options of tightening, loosening or to hold, the committee while taking the decision took cognisance of the need to address unfolding and unfavourable micro economic development.
He said these were reigning inflation, need to support growth and employment through the extant intervention and recent initiative to support external reserves and creation.
He added that in taking the decision, the committee noted the fact that the CRR was increased at the last MPC meeting.
He said time was required for its full effect to be manifested, pointing out that increasing the MPR would contradict the recent reduction in the interest rates of CBN intervention programmes from nine per cent to five per cent.
Emefiele said: “Besides, an increased in MPR will be taken by Deposit Money Banks (DMBs) as an invitation to increase lending rate and this will be most undesirable at this point in time when efforts are being made to avert a recession.
“Another reason is that a reduction in MPR will not make DMBs to reduce lending rate but other CBN strategies are making DMBs to reduce the lending rates in furtherance of the growth objective.”
Emefiele said the MPC also noted continued rise in domestic prices, low oil prices in the wake of oil global shock, exchange rate pressure and other domestic and fiscal responses in the revolving crisis.
He stated that in view of these, the committee unanimously voted to retain MPR and hold other policy parameters constant.