With Nigerians grappling with the painful reality of the country’s economy in recession, the Central Bank of Nigeria (CBN) has opted to retain all fiscal policy instruments unchanged from the previous month.
The Monetary Policy Committee (MPC) of the bank said at the end of its meeting in Abuja, that the Monetary Policy Rate (MPR), which sets the lending rate for banks and businesses for a period, would remain at 14 per cent.
Equally, the committee said Cash Reserve Ratio (CRR), which establishes the specified minimum fraction of customers’ total deposits commercial banks could hold as reserves either in cash or deposits with the CBN, would be left at 22.5 per cent.
The CBN governor, Godwin Emefiele, said at the end of the meeting that the liquidity ratio was left by the MPC at 30 per cent, with the symmetric window kept at +200 and -500 basis points around the MPR.
Although the National Bureau of Statistics (NBS) said the economy had slipped into recession after a contraction to minus 2.37 per cent in the second quarter of the year, Mr. Emefiele said he remained optimistic about prospects of a quick recovery.
“Today, I am optimistic (of an early recovery), because between July and now, we have seen inflow of foreign exchange above $1 billion into the economy used by manufacturers to procure raw materials. Those who said they were closing, would begin to produce and employ people; improve productivity,” he said.
The CBN governor said the decision to retain policy instruments at previous month’s rate was to continue its tightening of the monetary policy.
On measures to reduce the spread between official and parallel market exchange rate, Mr. Emefiele frowned on the attention accorded the parallel market, which he described as a shallow market that should not control more than five per cent, maximum 10 per cent of the market.