By Christel Odili
The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday left the Monetary Policy Rate unchanged at 14 per cent.
The CBN Governor, Mr. Godwin Emefiele who announced the decision of the committee at the end of a two-day meeting held at the apex bank’s headquarters in Abuja explained that the members of the committee agreed to maintain the current monetary policy stance.
The CBN Governor mentioned that tightening would strengthen the impact of monetary policy on inflation with complementary effect of capital flows and exchange rate stability; it could potentially dampen the positive outlook for growth and financial stability as this would constitute a risk in productive sectors of the economy.
According to him, “Loosening would strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing, it could aggravate upward trend in consumer prices and generate exchange rate pressures.
“The committee also felt that loosening would worsen the current account balance of the country through increased importation.”
While the MPC also called for an early passage of the 2018 budget to “keep fiscal policy on track”, Emefiele, noted that with the rise of inflation from 9 percent in January 2016 to 18.7 percent in January 2017,” most members of policy committee meeting think it is too high and we are working very hard thinking very seriously and manage for price and monetary stability and see to the fact that inflation is brought down to the traditional level where we have our target of between 6-9 percent.
His words, “We are working hard at it and I am very optimistic that with the focused and tenacity of the monetary policy committee that this will be achieved.
“You are all aware that the senate last week recently approve the request of the executive to embark on borrowing $2.5 billion to support the 2017 budget, borrowing requirement and $3million for refinancing of domestic debt into external.”
On banks stability, he noted that the overall outlook for the banking system was stable, as banks’ Balance sheets remain strong, in spite of the Non-Performing Loans challenges regarding some sectors.
He added that monetary authorities were putting in place, early warning systems in order to identify vulnerability and to proactively manage any emerging risks in the banking system.
The governor said that the monetary authorities wanted a tenacious implementation of the 2017 budget as well as, an early passage of the 2018 budget, in order to positively impact on the overall economic performance.
He called for a focused policy measures and an aggressive stance policy implementation in order to strengthen the economic recovery which remained weak.
Emefiele while addressing the Eurobond road show in United Kingdom, said, “the road show actually took place on Thursday and Friday and sure you are all aware that as at yesterday the pricing was done and the information that I got was that the bond was over subscribe to the tone of about $11billion however we could only access $3billion into tranches 15 years and 30 years tranches, I think one was at 16.5% the other about 7.3%.
“The investors’ confidence in Nigeria economy continue to be strong base on most of the macroeconomic indices and also supported by decisions of both Monterey and fiscal policy, there is confidence by the investor community about what the government is doing and it delight us that the level of confidence has improve and enhance you see that the activities of the monetary and fiscal authorities has resulted in the country existing recession.
“For a country that grows its population by an average of 3%, nothing short of going back to the historical levels of average of 6% will be considered good, yet we know it’s a long journey from 1.4 to an average of 6%. With lots of work been done, with aggression and focus been shown by the policy maker, were am talking of monetary, fiscal and trade policy makers am very optimistic that we will get there in short time”