Post Views: 207 For the seventh consecutive meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) ended its two-day meetin...
For the seventh consecutive meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) ended its two-day meeting on Tuesday, voting to hold the nation’s benchmark interest rate at 14%.
Reuters reports Godwin Emefiele as saying six of the seven members of the committee who took part in the meeting voted to hold the Monetary Policy Rate, while one member voted for a cut.
“Loosening at this time would exacerbate inflationary pressures and worsen the exchange rate and inflationary rate condition,” said Emefiele of the committee’s decision not to cut borrowing costs.
Nigeria emerged from recession in the second quarter of this year, when Africa’s biggest economy expanded 0.55% year-on-year, just as Year-on-Year inflation slowed for a seventh month in August, easing to 16.01%.
Fourteen of 15 economists polled by Reuters last week had predicted rates would stay on hold while one forecast a 200 basis point cut.
Nigeria’s economy shrank by 1.5 percent in 2016, its first annual contraction in 25 years. The recession was largely caused by low oil prices since the country relies on crude oil sales for around two-thirds of government revenue.
Dollar shortages have been a hallmark of the economic downturn. The central bank has maintained at least six exchange rates – including an official rate, a black market rate and one for Muslim pilgrims – to mask pressure on the naira currency.