The Monetary Policy Committee of the Central Bank of Nigeria, after its two-day meeting on Tuesday, retained the Monetary Policy Rate at 11.5 per cent amid concern for inflationary pressure.
The committee also retained the asymmetric band at +100 basis points and – 700 bps, cash reserve ratio at 27.50 per cent, and liquidity ratio at 30 per cent.
A communiqué issued after the meeting, said, “The MPC agreed to hold all policy parameters constant. The committee thus decided by a unanimous vote to retain the Monetary Policy Rate at 11.5 per cent.
“The committee expressed concerns on the persisting uptick in inflationary pressure for the 16th consecutive month, with headline year-on-year inflation moving further to 15.75 per cent in December 2020 from 14.89 per cent in November 2020.”
The committee, however, advised that there was a need to quicken the pace of recovery through collaboration with the fiscal authority by providing complementary spending to finance productive ventures.
Reacting to the MPC’s decisions, analysts at Cowry Asset Management said, “The unanimous vote by all members of the MPC to leave all key rates unchanged, which was in line with our expectation, was on the back of its optimistic outlook on inflation rate to moderate, stable crude oil prices and increase vaccination against coronavirus.
“Nevertheless, we note that the possibility of the MPC to continue to pursue expansionary policy, especially through the use of MPR, may have been constrained by the level of liquidity in the financial system and its attendant adverse effects on exchange and inflation rates. Hence, its new directional approach to systematically synchronise monetary and fiscal policies accommodation through developmental finance initiatives.”
