Nigeria’s key monetary variables, as decided by the last Monetary Policy Committee (MPC) in November 2017 remain unchanged as the Committee failed to hold its first meeting in the year due to the Senate’s delay in confirming the new members of the MPC.
The is implies that the Monetary Policy Rate (MPR) remains at 14.0 percent, Cash Reserve Ratio (CRR) at 22.5 percent, liquidity ratio at 30.0 percent and the asymmetric corridor at +200 an -500 basis point around the MPR.
While the development is said to have no immediate impact on the economy, credit to the real sector of the economy remains constrained.
Johnson Chukwu, managing director/CEO, Cowry Asset Management limited, told BusinessDay that there is no immediate impact on the economy but expects continued contraction in monetary policy stance.
Credit to the private sector, however, contracted by 0.24 per cent in October 2017, compared with the provisional benchmark of 14.88 per cent.
The MPC in November noted the structural constraints in the transmission of credit to the real sector of the economy as well as the rising unemployment level and urged the management of the Bank to continue to encourage the deposit money banks to accelerate the rate of credit growth to the real sector of the economy. Bongo Adi, senior Economics lecturer with Lagos Business School said there no cause for alarm as Parameters have remained almost unchanged from previous quarter and even if they were to meet, there seems to be no unanticipated macroeconomic shock that could force any modification of the key rates. So, no meeting would be neutral on monetary policies”.
Taiwo Oyedele, head of tax and regulatory services, PWC, said the MPC is a key committee that plays a significant role in the management of Nigeria’s economy. Their role goes beyond just setting monetary policy rates. Their inability to form a quorum due to the failure by lawmakers to screen and approve new members of the committee is unfortunate.
“It sends the wrong signal about government priorities and could create uncertainties if allowed to persist as it limits government’s ability to respond to macroeconomic changes”, Oyedele said.
President Muhammadu Buhari, had in October 2017 appointed Aishah Ahmad as Deputy Governor of the Central Bank of Nigeria (CBN) and other new members of the MPC for confirmation by the Senate.
The other four nominees who are expected to resume duty this month include Adeola Adenikinju; Aliyu Sanusi; Robert Asogwa and Asheikh Maidugu.
However, none of the nominees has been confirmed by the Senate, thereby preventing the committee from forming a quorum. The Second Schedule of the CBN Act (Section 12(5) and 54, stipulates that the MPC shall meet at least four times in a year and that the quorum shall be six members, two of whom shall be the Governor and a Deputy Governor or two Deputy Governors.
Godwin Emefiele, governor, Central Bank of Nigeria (CBN), allayed the fears of Nigerians and the international community over the inability of the Bank to hold the Monetary Policy Committee (MPC) meeting earlier scheduled for Monday, January 22 and Tuesday, January 23, 2018 due to the non-confirmation of the MPC nominees by the Nigerian Senate.