The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday reduced the Monetary Policy Rate (benchmark interest rate) from 13 per cent to 11 per cent. The decision was announced by the CBN Governor, Mr. Godwin Emefiele, while addressing journalists shortly after the MPC meeting held at the central bank’s headquarters in Abuja.
Explaining how the decisions were arrived at, the governor explained that the MPC, by a vote of eight to two, reduced the MPR from 13 per cent to 11 per cent, while two members voted for a retention of the rate at 13 per cent.
For the CRR, he said seven members voted to reduce it from 25 per cent to 20 per cent, while three elected to hold the rate. In addition, Emefiele said eight members voted for an asymmetric corridor of +2/-7 per cent, while two voted to retain the symmetric corridor of +/-2 per cent around the MPR.
In arriving at the decisions, the governor said the committee considered the weakening fundamentals of the economy, particularly the low output growth, rising unemployment and the uncertainty of the global economic environment. He said,
“The MPC noted the fragility of the domestic macroeconomic environment; reflected partly in low output growth, soft oil prices, low credit to the high employment elastic sectors of the economy, and sustained inflationary pressure, which, however, softened moderately in October.
“The MPC was particularly concerned that the previous liquidity injections embarked upon through lowering of the CRR in the last MPC has not transmitted significantly to improved credit delivery to key growth and employment in sensitive sectors of the economy.
“Rather, more credit was to sectors with low employment elasticity. While noting the imperative of complementary fiscal policies to augment monetary policy under the circumstance, the monetary policy must remain bold in charting the desired course that will stimulate sustainable output growth in Nigeria.”
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