The Central Bank of Nigeria in its first Monetary Policy Committee (MPC) meeting in 2017 has left its Monetary Policy Rates unchanged. The Monetary Policy Rate (MPR), which is the benchmark interest rate was retained at 14 per cent, cash reserve requirement (CRR) and liquidity ratio (LR) were retained at 22.5 per cent and 30 per cent respectively while the Asymmetric Window was retained at +200 and -500 basis points.
This is the third time the committee has left the key rates unchanged, the bank in the its 253rd meeting in November 2016 retained the rates. Back in November, the decision was predicated on the need to mitigate the fragile macroeconomic conditions and the strong headwinds confronting the Nigerian economy.
The decision of the Central bank meets the expectations of analyst who had predicted that the apex bank is unlikely to temper rates. Specifically, Chief Economist and Managing Director, Global Research, Africa, Standard Chartered Bank, Razia Khan, had noted that “The absence of any further policy measures on FX liberalisation suggests that the CBN will be quite comfortable keeping interest rates on hold.”
Speaking further Khan said, “Although inflation has been pressured higher, further tightening would be more plausible if there was some expectation that it might trigger a positive response from offshore portfolio investors, and bring about greater FX inflows. These plans look to have been put on the backburner for the moment.”
Speaking on behalf of the ten members who voted unanimously in support of the decision, the Central Bank governor, Godwin Emefiele, said the committee expects a more stable economy in 2017 as a result government policy and some of the decisions of the CBN.
Specifically, the CBN governor stated that the Anchor Borrowers Programme has gone a long way at improving agricultural output. In this direction the governor said that agriculture has continued to play a bigger role on the economy as evidenced by its contribution to Gross Domestic Product in the third quarter of 2016.