MPC: Why we refused to reduce 14% Interest rate – Emefiele

By Etuka Sunday

The Central Bank of Nigeria (CBN) yesterday advanced reasons why Monetary Policy Committee (MPC) members voted not to reduce the interest rate below 14%.
Rising from its meeting in Abuja, the Chairman of the Committee / CBN Governor, Mr Godwin Emefiele pointed at inflation and exchange rate volatility as reasons why the 14% interest rate was not reduced.
Mr Emefile said, Fiscal policy activities and acceleration in the way of spending during election period may lead to inflationary tendencies, which may reverse the efforts so far made.
The CBN boss, said, the apex bank would work assiduously to ensure that spending during election does not affect the inflation and exchange rate.
Meanwhile, he said, the Committee voted to retain the MPR at 14.0%; CRR at 22%; Liquidity Ratio at 30.0%; and Asymmetric corridor at +200 and -500 basis points around MPR.
He said, “the committee, while arguing for a hold, observed that the downside risk to growth and upside risk to inflation appears balanced as growth is improving while inflation is moderating.
“Maintaining the current policy stance would sustain gradual improvements in both indices.
“It was noted that there is need to see how all the components of GDP would evolve in the second quarter of 2018 in order to gain greater clarity on the direction of monetary policy,” he said.