The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has again maintained the monetary policy rate at 11.5 percent.
The CBN governor, Godwin Emefiele announced this during a press briefing at the CBN headquarters on Tuesday.
Emefiele while speaking further on the decision of the MPC at the end of the two-day rates decision meeting said the committee voted to leave the MPR at 11.5 per cent, Cash Reserve Ratio at 27.5 percent, and Liquidity Ratio at 30 percent.
The decision by the 10 members who attended the meeting was unanimous. That’s a change from March, when six favored a hold and three voted for a hike of at least 50 basis points.
He explained that the move is expected to allow further economic growth, after the country exited recession in the fourth quarter of 2020, amid rising inflation
Inflation, which slowed marginally to 18.1% in April, is driven by supply-side factors, including insecurity and poor infrastructure, he said, stating further that the MPC sees price-growth pressures easing as domestic supply grows, he said.
Food prices have been a key driver of headline inflation due to disruptions caused by an Islamist insurgency in the northeast, a worsening conflict between nomadic cattle herders and crop farmers in key agriculture areas and restrictions on foreign-exchange access for imports including rice, dairy and fertilizer
The MPC also lamented the effect of insecurity on the nation’s economy and called on the Federal Government to handle insecurity immediately to successfully tackle inflation.
On the effect of the Coronavirus pandemic, the MPC advised against another total lockdown stating that this will reverse most of the economic gains made in the country since the gradual reopening of the economy.
The MPC also noted that at least 70% of Nigeria’s population must be vaccinated if the country means to achieve economic recovery.
Responding to questions on the CBN ban on cryptocurrency transactions in Nigerian banks, the CBN governor insisted that the encrypted nature of cryptocurrency transactions makes it hard for fraud to be investigated and criminals apprehended.
According to Emefiele, no responsible Central Bank will support such transactions.
The MPC cut the key rate by 200 basis points in 2020 to support Africa’s largest economy against the impact of coronavirus lockdowns and a plunge in oil prices.
However, gross domestic product still contracted the most since at least 1991 and while Nigeria emerged from a recession in the final three months of last year, data on May 23 showed the rebound is still very fragile, with first-quarter growth at 0.5%.
The economy remains on a trajectory of recovery and recent data suggests that will continue through 2021.
GDP could expand 2.5% this year and 2.3% in 2022, according to the International Monetary Fund.