The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday retained Monetary Policy Rate at 13.5 per cent. According to the CBN Governor, Mr Godwin Emefiele, all members of the committee agreed to retain the current monetary policy stance.
The apex bank boss said the committee also held the Cash Reserves Ratio at 27.5 per cent while the Liquidity Ratio was left unchanged at 30 per cent.
Emefiele said the committee also left the Asymmetric Window at +200 and -500 basis points around the MPR.
Explaining the rationale for the decision, the governor said the committee took cognisance of the need to address the unfolding unfavourable macroeconomic developments, and inflation.
Others are the need to support growth and employment through its interventions, check capital outflows and support external reserves accretion.
He said, “A review of the policy options indicates relative tightness of the current monetary policy stance.
“The CRR was increased at the last MPC meeting. Time is required for its full effects to manifest. Increasing the MPR will be contradictory to the recent reduction of interest rate in the CBN intervention windows from nine per cent to five per cent.
“Besides, an increase in MPR will be taken by the Deposit Money Banks as an invitation to increase lending rates and this will be most undesirable at this point in time when efforts are being made to avert a recession.”
Besides, the governor said a reduction in the MPR would not encourage the DMBs to reduce lending rates.
The Monetary Policy Committee also pointed out that the outbreak of the coronavirus pandemic could lead to massive economic crisis capable of throwing many countries into recession.
The committee said the COVID-19 pandemic would not only result in health crises, but also massive economic crises that would force even leading industrialised countries into recession.