MPC urges FG to limit domestic borrowing, holds key rates unchanged


As inflationary pressures in the economy continued to moderate with headline inflation, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has urged federal government to restrain on domestic borrowing in order to lower the cost of credit to the private sector.
The new constituted committee at their first 2018 quarterly meeting held in Abuja today noted that the continued low level of lending by banks remains a constraint to growth of the real sector of the economy.
Speaking to journalists at the end of the two days meeting, Governor of CBN, Godwin Emefiele said the committee advised the management of the CBN to continue to provide the required policy impetus to engender improved credit delivery by the deposit money banks to the economy.
They revealed that, money market interest rates reflected liquidity conditions in the banking system as the average inter-bank call rate increased to averagely 12.42 per cent in February 2018 from 9.49 per cent in December 2017.
MPC observed that, while this development may be a reflection of improved investor confidence in the economy, it cautioned that the management of the bank should carefully monitor the developments and to establish mechanisms for safeguarding the stability of the foreign exchange market in the event of a sudden capital reversal.
However, against the expectations, the committee hold key rates unchanged.
Emefiele explained that nine members of the committee unanimously agreed to maintain the current Monetary Policy Rate at 14 per cent.
He also explained that apart from the MPR which was retained at 14 per cent, the committee also retained the Cash Reserves Ratio (CRR) at 22.5 per cent.
The committee also retained the Liquidity Ratio which was left at 30 per cent; and the Asymmetric Window which was left at +200 and -500 basis points around the MPR.