The Monetary Policy Committee of the Central Bank of Nigeria, after its two-day meeting on Tuesday, kept all the monetary policy parameters at their current levels.
This is the second time the MPC has left rates unchanged since the beginning of the year.
According to the committee, the decision to keep the rates at their current levels, despite rising inflation, followed the need to boost output, given that the economy just exited recession.
It decided to retain the Monetary Policy Rate at 11.50 per cent with the asymmetric band at +100bps and – 700bps around the MPR.
It also voted to keep unchanged the Cash Reserve Ratio at 27.50 per cent and the Liquidity Ratio at 30 per cent.
In explaining its decisions, MPC said it observed that the vaccination against the Coronavirus Disease had gained ground in major advanced economies, but that the slow pace of vaccination in some emerging markets and developing economies weighed on the even recovery of global output.
It noted the growing concerns associated with the efficacy of the vaccines being distributed across countries, especially with the new variants of COVID-19, further threatens the recovery of the global economy.
“Despite this threat, the International Monetary Fund projected a global growth rate of 5.5 per cent in 2021,” the committee stated.
It further observed that inflation remained high in emerging markets and developing economies amid weak accretion to reserves, exchange rate pressures, sustained capital outflows and worsening insecurity.
Huge level of monetary and fiscal injections amid expansionary policy and stimulus packages may heighten the risk of financial instability, it suspected.
The MPC said the unabated rising trend of domestic prices and the need for monetary and fiscal policy to push down prices via financing productive ventures, which is expected to boost aggregate supply.
The innovation is the CBN’s effort to stabilise exchange rate, especially the incentives (Naira4Dollar) to attract diaspora remittances.
