CBN retains interest rate at 14%, issues guidance on rate cut in 2017

24 Jan 2017
Financial Nigeria

Summary

The CBN’s Monetary Policy Committee voted unanimously to retain the benchmark interest rate at 14 per cent in a bid to contain rising inflation and stimulate economic growth.

Godwin Emefiele, Governor, Central Bank of Nigeria

The Governor of the Central Bank of Nigeria, Godwin Emefiele, said today that the bank’s Monetary Policy Committee voted unanimously to retain the benchmark interest rate at 14 per cent in a bid to contain rising inflation and stimulate economic growth.

“Inflationary pressures are expected to subside in 2017 as oil prices improve . . . The Committee decided not to lower the monetary policy rate (MPR) on this occasion, but will do so when conditions improve,” the governor said.

Nigeria’s economy has been in the throes of a recession since the second quarter of 2016 due mainly to the slump in global oil prices. GDP contracted by 2.24 per cent in Q3’16, 2.06 per cent in Q2’16 and 0.36 per cent in Q1’16. Inflation has also been on the increase, rising to 18.48 per cent in December 2016 – the 12th consecutive month of acceleration since November 2015.

Besides the MPR, Emefiele also said the Committee voted to retain cash reserve ratio at 22.5 per cent, liquidity ratio at 30 per cent, and the asymmetric corridor around the MPR at plus 200 and minus 500.


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