Monetary Policy Committee Retains CBN Interest Rate At 13 Per cent

At the end of the 244th monetary policy committee (MPC) meeting in Abuja on Tuesday, May 19,the committee retained the monetary policy rate (MPR) at 13 per cent with a corridor of +/- 200 basis points around the mid-point and also retained the liquidity ratio at 30 per cent.

The CBN governor, Godwin Emefiele explained that the committee noted the salutary effects of the successful conduct of the 2015 general election on the macroeconomic environment.

The committee expressed optimism that the confidence and goodwill arising from the successful elections would stem the spate of capital reversal, reduce pressure in the foreign exchange market and stabilise the financial markets in the short to medium term.

“A combination of the renewed confidence and recent administrative measures around the foreign exchange market have eased pressure on the naira, resulting in relative stability in all segments of the foreign exchange market. Furthermore, the significant rising trend in credit to government was regarded as potential headwinds to growth with negative spillovers to the already elevated lending rates, credit to the private sector and aggregate domestic investment including inflationary pressures.The committee expressed deep concern over the lacklustre performance of the external sector arising from a number of significant global shocks,” the CBN governor added.

Emefiele explained that the continued glut in crude oil supplies amidst softening prices, anchored by sluggish global output expansion could further threaten foreign exchange earnings and accretion to external reserves over a much longer period.

He noted that a near-term rally in oil prices was further undermined by the diminishing market power of the Organisation of Petroleum Exporting Countries (OPEC).



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