The Central Bank of Nigeria (CBN) held its benchmark interest rate at 14 percent on Tuesday. CBN governor Godwin Emefiele made this known after a Monetary Policy Committee (MPC) meeting in Abuja, Nigeria’s capital city.
The central bank’s decision is in line with the prediction of fourteen of the economists polled by Reuters last week who predicted rates would be held.
Six of the seven members of the monetary policy committee voted to hold rates, while one voted for a cut.
Interest Rate in Nigeria reached an all time high of 14 percent in July of 2016 and has been held at that level since then. CBN Governor Emefiele explained why the Bank has kept rates at 14 percent so far. According to him, “the effects of fiscal policy actions towards stimulating the economy have begun to manifest as evident in the exit of the economy from the fifteen-month recession.”
“Although still fragile, the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decisions to strengthen the recovery. Secondly, the Committee was of the view that economic activity would become clearer between now and the first quarter of 2018, when growth is expected to have sufficiently strengthened and gains in receding inflation, very obvious.” Emefiele also added that rates were raised to maintained “was to achieve more clarity in the evolution of key macroeconomic indicators including budget implementation, economic recovery, exchange rate, inflation and employment generation.”
The CBN retained the Cash Reserve Ratio (CRR) at 22.5 per cent; the Liquidity Ratio at 30.0 percent; and the Asymmetric corridor at +200 and -500 basis points around the MPR.