The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday retained the benchmark lending rate and other monetary policy rates against a backdrop of macroeconomic stability.
The CBN Governor, Godwin Emefiele, said this on Tuesday in Abuja while addressing journalists on the outcome of the MPC meeting.
Mr. Emefiele said that seven members of the MPC were present at the meeting and 6 members voted for the retention of all rates while one member voted for the easing of the lending rate.
He said Cash Reserve Ratio was also retained at 22.5 per cent and Liquidity Ratio at 30 per cent.
Also, the Asymmetric corridor was retained at +200 and -500 basis points around the MPR.
The News Agency of Nigeria reports that since July 2016, there has been no major monetary policy change.
“On the argument to hold the rates, the committee believes that the effect of fiscal policy action towards stimulating the economy has begun to manifest as evidenced in the exit of the economy from the 15-month recession.
“Although it seems fragile, the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decision to strengthen the recovery.
“Secondly, the committee was of the view that economic activities would become clearer between now and the first quarter of 2018 when growth is expected to have sufficiently strengthened.
“The most compelling argument for a hold was to achieve more clarity in the evolution of key macro economy indicators, including budget implementation, economic recovery, exchange rate, inflation and employment generation,” he said.
Mr. Emefiele said that in arriving at the whole decision, the MPC was committed to employing maximum flexibility to guide the economy on the path of utmost growth.
He spoke on the concern raised by a member of Monetary Policy Committee (MPC), Dr Adedoyin Salami, over the CBN’s rise in financing of the government, thereby limiting private sector access to credit.
Mr. Salami, in a communique no 114, said monetary data showed a sharp rise in the extent of CBN financing of the Federal Government’s 2016 deficit.
He said the CBN had become a “piggy bank” in which over N1.5 trillion had been moved to service debt as at April, from N3 billion at the end 2016.
“Let me state categorically that the CBN has not over funded the Federal Government.
“The Federal Government on its own decided that all its funds, both in local and foreign currency, should be moved to the Central Bank of Nigeria, into the Treasury Single Account.
“It is important to put it in perspective. You as a customer of a Central bank or any other bank, and you have fixed deposit in an account and for some reasons you want spontaneous financing to meet your obligation.
“If you approach your bank to allow you to over-withdraw from your account temporarily, your bank will. So this has nothing to do with CBN or any other bank.
“The assurance I will give to you is this. There is no truth in the issue of over funding because whatever is over drawn is far less than what the Federal Government also has in its TSA account.
“So basically all this has to do with the lack of understanding of the operations of the CBN,” he said.
Mr. Emefiele refuted the claims that many commercial banks had very high Non-Performing Loans, NPL, higher than the benchmark NPL rate of 5 per cent.
He said that majority of the Money Deposit Banks had their NPL ratio hovering below or slightly above the 5 per cent benchmark.
He, however, agreed that the NPL of some few banks was above the benchmark rate.
He said that the CBN would continue to do all in its power to ensure the sustainability of the Nigerian banking system.
Support PREMIUM TIMES' journalism of integrity and credibility
Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.
For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.
TEXT AD: To advertise here . Call Willie +2347088095401...