Despite a volatile global economy resulting from the ongoing invasion of Ukraine by Russia, the Nigeria Central Bank said it is retaining its Monetary Policy Rate or MPR at 11.5% in its attempt to support output growth.
With the nation’s current inflation at 15.7%, exacerbated by the ongoing fuel crisis, experts had predicted that the CBN would naturally increase the MPR at its Monetary Policy Committee or MPC. However, the apex bank said pushing borrowing costs to restrictive levels will not favour Nigeria’s economic recovery from the Covid-19 pandemic.
Addressing a press conference, CBN governor, Godwin Emefiele, said that the sanctions imposed on Russia by NATO countries would have a significant downside risk on the global economy; and has already eroded the gains that countries recorded since lifting Covid-19 restrictions.
According to him, tightening the policy could adversely affect the recovery of output growth and stifle investment expansion.
“The committee thus decided to retain MPR at 11.5 per cent; retain the asymmetric corridor at +100/–700 basis points around the MPR; retain Cash Reserve Ratio at 27.5 per cent; and Liquidity Ratio at 30.0 per cent,” he said.
According to the governor, these retentions would support economic growth already threatened by the global oil situation, which has affected the oil and gas sector and raised inflation.
The MPR rate is the benchmark interest rate at which the central bank lends to commercial banks and the rate at which banks lend to their customers to control the amount of money into the economy effectively. The rate has remained at 11.5% since the last quarter of 2020 despite persistent inflation.