CBN retains interest rate at 14%, decries rising external debts

The Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR) at 14 per cent and other parameters therein.

The MPR is the rate at which the apex bank lends to deposit money banks in the country and it equally determines the rate at which the financial institutions lend to their customers. The rate has remained unchanged since 2016.

CBN Governor and Chairman of its bi-monthly highest policy-making Monetary Policy Committee (MPC), Godwin Emefiele, at the end of their first meeting in 2019 yesterday in Abuja, said all 11 members voted for the retention of the rate.

He said:” The committee’s decision is that, in the light of the above, the MPC decided by a vote of all 11 members to keep the policy parameters unchanged from their current levels. In summary, the MPC voted to retain the MPR at 14 per cent; the asymmetric corridor of +200/-500 basis points around the MPR; the CRR at 22.5 per cent; and the Liquidity Ratio at 30 per cent.”

On how the decision was arrived at, Emefiele noted: “Weighing the balance of its judgment on price stability conducive to growth, the MPC felt that tightening would result in the loss of the gains so far achieved, as this may drive the banks to re-price their assets, thus increasing the cost of credit as well as elevating credit risk in the economy. It will also worsen the position of non-performing loans of the banks. “

The meeting expressed concerns over the nation’s growing external debts. It advised the Federal Government to vigorously pursue its Value Added Tax (VAT) project by widening initiatives to raise more revenues locally.

On the divulging of customers’ information to unauthorised persons by banks, the CBN governor condemned the act, warning the concerned institutions to end the practice. He promised to investigate the menace.

Also, the apex bank restated its apolitical stance, warning politicians to refrain from interfering with its policy decisions in their quest for political power.

Emefiele declared that the forex management under the current administration had recorded a lot of feats with local production growing phenomenally.