By Agency Report
The Monetary Policy Committee (MPC) for the 13th consecutive time, retained the Monetary Policy Rate (MPR) at 14 per cent.
The Central Bank Governor, Godwin Emefiele, made this known at a news conference on Tuesday in Abuja on the outcome of the 263rd Monetary Policy Committee meeting.
Mr Emefiele said 10 members were present at the meeting and seven voted to retain the MPR, while three members voted to increase the MPR, which was last changed in July 2016.
“This means that the Cash Reserve Ratio still remain 22.5 per cent and Liquidity Ratio, 30 per cent.
“Also, the Asymmetric corridor is at +200 and -500 basis points around the MPR.”
Mr Emefiele said in coming to the decision, the committee considered the impact of liquidity injection from election related spending, and increase in Federation Allocation to states due to increase in oil receipt.
He added that the committee spending must be curtailed so as not to further increase inflation which had gone up from 11.14 per cent in July to 11.23 per cent in August.
Mr Emefiele said the committee also noted with concern, the rising level of non-performing loans in the banking system and the growth challenges and inflationary pressure on the economy.
“In view of the development, the committee therefore, identified two likely policy options: Tightening or maintaining the status quo.
“Tightening would tame inflationary measure, tame the reversal of portfolio capital, improve external reserves, and maintain stability in the foreign exchange market.
“Conversely, the committee also noted that raising rate would further weaken growth, as credit would become more expensive, non-performing loans will increase further, leading to a deceleration in output.
“In the committee opinion, the upward adjustment would not only signal the bank’s commitment to price stability but also its desire to maintain all policy interest rate.
“A decision to hold all policy parameter will sustain natural improvement in output growth,” he said.
According to Mr Emefiele, the MPC want the government to fast track implementation of the 2018 budget to help jump start the process of sustainable economic recovery.
In addition, he said, the committee expects the fiscal authority to fast track implementation of the Economic Recovery and Growth Plan to stimulate economic activities and create employment.
“The committee noted with concern, the disruption to the food supply chain in major food producing states due to poor infrastructure, flooding and the ongoing security challenges.
“It noted the rise in food prices contributing to the uptake in the headline inflation.
“However, the committee was optimistic that as harvest progress, in the coming month, pressure on food prices would recede and impact positively on food prices over the medium term,” the CBN governor added.
Speaking on the development that led to the revocation of the operating license of Skye Bank, Mr Emefiele said that the action was to protect investors, save 5,000 jobs and millions of customers from losing their money.
“The name had to change from Skye Bank to Polaris Bank for legal reasons.
“The CBN has invested close to N800 billion in this bank, so it must be seen to be owned by the CBN until we find investors that can pay a fair price for the bank,” he said.
Mr Emefiele also confirmed that Polaris Bank was duly registered as a limited liability company with Corporate Affairs Commission and later given a license by the CBN to operate as a financial institution.