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CBN MPC snobs experts, retains high interest rates

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CBN stirs controversy with reversal of SME funding policy

Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, on Tuesday, at the MPC confirmed that there will be no downward review of the high interest rates in Nigeria, despite calls by experts to the contrary.

Experts had always lamented that the CBN’s high interest rate was contributing to the high rate of inflation in the country.

Failure of the CBN to effect changes after its Monetary Policy Committee (MPC) meeting in September 2016 had caused a row between the Minister of Finance, Kemi Adeosun and Emefiele.

But speaking to newsmen, Tuesday, at the end of a two-day meeting held at the apex bank’s headquarters in Abuja, the apex bank boss said though necessary adjustments would be made in the next few days ahead of next year, the committee had resolved to retain the current 14 per cent interest rate and 18.5 per cent for inflation.

Also, the cash reserve ratio is left at 22.50 per cent, while the liquidity ratio is still at 30 per cent.

The MPC November meeting was to mark the end of 2016 fiscal and monetary policy review.

Read also: Fitch downgrades Nigerian banks, can’t meet 2020 growth

Emefiele explained that the factors that had made the MPC to allow the various rates, including distortions in the foreign exchange market and reduction in revenue from the oil sector, were still prevalent.

“The identified challenges in the economy remain, affecting the monetary policy cannot be wished away by mere cutting interest rates, meaning that it is not advisable,” he stated.

He said the committee had considered relevant risks and concluded that the economy continued to face elevated risks on both price and output fronts.

He said the need to allow this and other measures like the foreign exchange reforms to work truthfully, had led the committee in deciding to retain all monetary policy instrument at their current levels.

But unlike its voting pattern in September, which saw all the 10 MPC members voting in unison, the November meeting had two remaining neutral at the voting to arrive at the communiqué, said a CBN source at the meeting venue.

By Emma Eke…

 

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0 Comments

  1. JOHNSON PETER

    November 22, 2016 at 8:05 pm

    So CBN are going against ministry of finance. Serve them right.

  2. yanju omotodun

    November 22, 2016 at 9:18 pm

    All I need CBN do is one , strengthen naira against dollar with whatever policy they can use to do so.

    • Nonso Ezeugo

      November 23, 2016 at 5:31 am

      Yes so that our country naira can be valuable and respected just like the white. We are counting on the CBN for this

  3. Animashaun Ayodeji

    November 22, 2016 at 9:21 pm

    But Nigerians don’t need all these now, all we want is stability in economy, if you like make Naira run after Dollar or vice-versa, so far we are not suffering and our economy isn’t lagging behind, everyone will be happy.

  4. Johnson Amadi

    November 22, 2016 at 9:36 pm

    Despite all their expertise, they are still finding it very difficult to fix our diminishing economy, it’s a pity. They only have the required qualifications to be called experts, they cannot apply them. Of what use is their expertise when they cannot get the country out of recession?

  5. Joy Madu

    November 23, 2016 at 5:24 am

    We don’t want this stubborn argument all will want is economic recession balance in this country

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