Central Bank of Nigeria (CBN), through the Monetary Policy Committee (MPC) yesterday retained the monetary policy ratio (MPR) at 12.00 per cent.
The meeting which held in Abuja also retained the CRR at 22.50 per cent, the Liquidity Ratio at 30.00 per cent and retained the asymmetric window at +200 and -500 basis points around the MPR.
The meeting has also introduced greater flexibility in the inter-bank foreign exchange market structure and to retain a small window for critical transactions.
According to the communiqué issued at the end of the meeting, in the first quarter of 2016, the economy suffered from severe shocks related to energy shortages and price hikes, scarcity of foreign exchange and depressed consumer demand, among others. Consequently economic agents could not undertake new investments or procure needed raw materials. Shortage of foreign exchange arising from low crude oil prices manifested in low replacement levels for raw materials, other inputs as well as new investments.
The Committee noted a further increase in year-on-year headline inflation to 12.77 per cent and 13.72 percent in March and April 2016, respectively, from 11.38 per cent in February 2016.
The increase in headline inflation in April reflected increases in both food and core components of inflation. Core inflation rose sharply for the third time in a row to 13.35 per cent in April from 12.17 per cent in March, 11.00 per cent in February and 8.80 per cent in January having stayed at 8.70 per cent for three consecutive months through December, 2015.
The Committee observed with concern, the continuous dismal performance of growth in credit to the private sector, noting that in spite of the Bank’s efforts, DMBs continued to direct credit largely to low employment elastic sectors of the economy, a phenomenon that had significantly contributed to the low performance of the economy.
