New Telegraph

CBN retains lending rate at 11.5%

The Monetary Policy Committe (MPC), yesterday, unanimously voted to retain the lending rate (MPR) at 11.5 per cent; asymmetric corridor of +100/-700 basis points around the MPR; retain Cash Reserves Ratio ( CRR) at 27.5 per cen and Liquidity Ratio at 30 per cent for umpeenth time.

 

On the state of economy, which informed MPC’s decision to retain key parameters unchanged, the Central Bank of Nigeria (CBN), Godwin Emefiele, said the economy had shown modest recovery.

 

“The committee noted the gradual recovery in output growth following positive growth in the first quarter and improving PMI in subsequent months, expressing confidence that the second quarter output resultwill show further improvement.

 

“The MPC carefully accessed the options confronting it in the short to medium term, analysing the downside risks to growth and upside risks to inflation.

 

It commended the continued effort by both the monetary and fiscal authorities as well as public health agencies in stemming the pandemic and its impact, thus, returning the economy to a path of recovery.

 

While the economy has been gradually reopening, Members noted that the Pandemic was far from over and therefore continued to hinder the recovery.

 

“It thus urged the Presidential Task Force on COVID- 19 to intensify efforts towards procurement of more vaccines to ensure that herd immunity is achieved in Nigeria.”

 

“The MPC was concerned about the broad level of insecurity across the country, noting its impact on business confidence and overall economic activities. It noted the persisting insecurity in key commodity producing areas and urged the federal government to intensify security surveillance in farming communities to ensure uninterrupted farming activities.

 

“Committee members expressed optimism about the likely moderating impact of the forthcoming harvests on food prices, as this would contribute to the ongoing broad reduction in headline inflation,” he said.

 

To arrest the rising prices of food stuff, Emefiele said: “CBN will continue to release maize from its strategic maize reserve directly to feed-millers as part of its strategic response to address rising food prices and moderate the price of maize across the country.

 

“Members further noted the contribution of poor infrastructure to rising domestic price levels, re-iterating their call to the federal government to prioritize investment in public infrastructure such as improved transportation networks, power supply and telecommunication facilities.

 

“Funding for such projects, the committee noted, could be sourced through public-private-partnerships, as well as the issuance of diaspora bonds.”

 

On the state of affairs of the banking sector, he said the banks remained resilient with Non-Performing Loans (NPLs) within tolerable threshold.

 

The MPC, he added, applauded the continued resilience of the banking system in the face of severe shocks to both the domestic and global economies.

 

“Members noted management’s effort in maintaining a reasonably low level of non-performing loans ratio, even though aggregate credit moderated slightly. “The committee encourages Nigerian banks to extend more credit to consumers and firms to enhance consumption and production activities necessary to strengthen the recovery.

 

“Committee members noted the persistent reduction in remittance of oil revenue to the Consolidated Revenue Fund, stemming largely from rising levels of cost under-recovery and other obligations, particularly to joint venture contracts.

 

The committee thus, urged the government to continue to explore additional sources of non-oil revenue, as this would reduce the over dependence on a single revenue source,” he said.

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