The Central Bank of Nigeria (CBN) Tuesday resolved to leave all monetary policy parameters unchanged, retaining the Monetary Policy Rate (MPR) otherwise known as interest rate at 11.5 per cent with the assymetric corridor of +100/-700 basis points around the MPR.
Addressing journalists at the end of the two-day meeting of the Monetary Policy Committee (MPC) in Abuja, the CBN Governor, Mr. Godwin Emefiele, said the committee also voted to retain the Cash Reserve Ratio (CRR) at 27.5 per cent as well as the Liquidity Ratio at 30 per cent.
He pointed out that the decision to hold the rates at their current levels, despite rising inflation, followed the need to boost output growth, given that the economy had just crawled out of recession.
The rate decision would allow the bank “to deploy liquidity into employment generation and output-stimulating sectors of the economy, this would help consolidate the country’s recovery process,” he said.
The bank cut rates twice last year to try to stimulate an economy that has been hobbled by the COVID-19 pandemic and an oil price crash,” Emefiele said.
A third of Nigeria’s workforce are now out of work and the economy expanded just 0.11% in the fourth quarter. Lower oil receipts have weakened its currency, the naira, and inflation climbed to a four-year peak in February as food prices jumped more than 20 per cent.
Few analysts expected the central bank to either raise or lower the 11.5% base rate, given Nigeria’s low growth and high inflation.