By Tony Obiechina, Abuja
The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday retained the Monetary Policy Rate at 11.5 per cent.
The CBN Governor, Godwin Emefiele, disclosed this while reading the communique after the committee’s two-day meeting in Abuja.
It also retained the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.
At the last MPC meeting in September, the committee reduced the MPR from 12.5 per cent to 11.5 per cent, but retained all other policy parameters, except the asymmetric corridor that changed from +200 and -500 basis points to +100 and -700 basis points around the MPR.
The liquidity ratio was left at 30% and Cash Reserve Ratio (CRR) retained at to 27.5%.
Emefiele had argued that the decision to reduce the MPR was to sustain ongoing economic recovery efforts and arrest rising inflation.
He also proposed that Nigeria will enter a V-shaped recession, meaning that the country would enter recession in the third quarter of this year and there will be growth in the fourth quarter or first quarter of 2021.
In his immediate reaction, Prof Uche Uwaleke of Nasarawa State University, Keffi, said the outcome of the November MPC meeting, which is the last for the year was expected.
” I did not expect any shift in position. Yes, the economy is now in a recession but this was already known to the members of the MPC before the September meeting. The reduction in MPR at that time was meant to aid economic recovery.
“So I did not expect a further reduction given the spike in inflation rate and a resurgence of pressure in the forex market.
“On the other side, an increase in MPR to stem inflation was also not expected in view of the adverse consequence on economic recovery.
“So, given the limitations associated with using the traditional monetary policy tools to stimulate the economy that is currently challenged by Stagflation, the feasible option the CBN has now is to continue to use heterodox measures such as the LDR and various intervention measures to support growth”, he added.
