Monetary Policy Committee Maintain Interest Rate
The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) has said it has retained interest rate at 14 percent, despite the sharp drop in inflation.
The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele said members of the committee considered risks like late approval of 2019 budget, farmers/herdsmen clashes, salary arrears, growing sovereign debt.
“The risks to the outlook include the huge liquidity injection that is expected to arise from the implementation of the proposed N9.12 trillion 2019 federal government budget, expenditure towards the 2019 elections, monthly FAAC injection, approval and implementation of the proposed new national minimum wage and the possibility of a supplementary budget to finance this,” he said.
“These could impact aggregate demand and put pressure on domestic prices in the remaining months of 2019 and dampen the gains already made by the bank in stabilising prices.
“Despite the drop in inflation, the current inflation rate is still above the targeted single digit. The objective of the policy stance, therefore, would be to accelerate the reduction of inflation to single digit to promote economic stability.
“There is need to see how all the components of the gross domestic product would evolve in the second quarter of 2019 in order to gain greater clarity on the direction of monetary policy.
“The predominant argument for a hold at this time is to await more clarity on the evolution of key indicators that is the passing of the budget and implementation, economic activity and traction in fiscal policy in 2019.
“The committee was convinced that the economy needed a new impetus for increased lending by the banking system and would work with the bank to encourage deposit money banks to adopt innovative ways to accelerate credit growth including a reduction in the policy rates when conditions for such a decision arise.”
NIGERIA NEWS had reported last week, that the Consumer Price Index which measures changes in the price level of consumer goods and services purchased, released by the National Bureau of Statistics revealed that inflation rate dropped from 13.34 percent in March to 12.48 percent in April.
The CPI showed that the rate recorded is 0.86 percent points less than the rate recorded in March 2019 (13.34) percent. The bureau, in the report, said this was the 15th consecutive month that the inflation rate would be experiencing a continuous decline.
NIGERIA NEWS recalls that the National Bureau of Statistics on Monday disclosed that Nigeria’s GDP grew by 1.95 percent year-on-year- in real terms in the first quarter of 2019.
The information was contained in the Nigerian Gross Domestic Product (GDP) Report released on Monday in Abuja. The 1.95 percent growth is a decline of –0.16 percent points from 2.11 percent.achieved in the fourth quarter of 2017, the NBS said.