The monetary policy committee of the Central Bank of Nigeria (CBN) on Tuesday unanimously voted to retain the monetary policy rate (MPR), which determines interest rate, at 11.5 percent.
The CBN governor, Godwin Emefiele, announced the committee’s decision at the end of its two-day meeting.
The committee also retained the Liquidity Ratio at 30 percent and Cash Reserve Ratio (CRR) at 27.5 percent. This according to the CBN “will allow current policy measures to permeate the economy.”
Emefiele expressed cautious optimism that Nigeria will exit recession in first quarter (Q1) of 2021 based on effort made by CBN and the fiscal authorities to create jobs and stimulate growth.
He, however, warned speculators against creating panic in the Nigerian foreign exchange market, insisting that the parallel market should not be the basis for determining the value of the Naira.
“The foreign exchange rate in Nigeria is determined by the forces of supply and demand in the Nigeria Autonomous Foreign Exchange Market (NAFEX) window,” he said.
The governor said CBN will attack inflation from the supply side through low interest rates, reiterating the need to diversify Nigeria’s economy to grow its foreign revenue base. He noted the impact of structural policies such as increase in petrol price and electricity tariff on inflation.
A number of central banks have lowered interest rates to support their economies in response to the pandemic, with the United States Federal Reserves saying it will keep rates at near zero percent until 2023.