CBN retains rate at 14 % …As External reserve rises above $34 b …$3 Eurobond oversubscribed by $11 b Emma Ujah, Abuja Bureau Chief The Central Bank of Nigeria (CBN), Monday, retained the Monetary Policy Rate (MPR) at 14 per cent. All other parameters were equally retained.
The Governor of the bank, Mr. Godwin Emefiele, disclosed this at a press briefing after the Monetary Policy Committee (MPC) meeting in Abuja. The decision to retain rate In arriving at the decision to retain the rate, the CBN boss said that the MPC took note of the gains made so far as a result of its earlier decisions including the stability in the foreign exchange market and the moderate reduction in inflation rate.
He said the MPC was faced with the decision “to hold, to tighten or ease policy stance. While tightening would strengthen the impact of monetary policy on inflation, with complementary effects on capital flows and exchange rate stability, it would nevertheless also potentially dampen paucity output for growth and financial stability as this would constitute a risk to the productive sector of the economy. “On the other hand, whereas loosing would stimulate out for growth, by stimulating domestic aggregate demand, through reduced cost of borrowing, it could nevertheless aggravate upward trend in consumer prices and generate exchange rate pressures. “Loosening could also worsen the current account balance of the country through increased importation.
“On the argument to hold, committee believes that key variables have continued to evolve in line with current stance of economic policy and should be allowed to fully manifest. Members noted that the developments in output and inflation in particular require close monitoring in order to gain clarity on medium term optimal path of the monetary policy.”
Investors oversubscribe Eurobond He also disclosed that the $3 billion Eurobond introduced to the international capital market last week has been oversubscribed by $11 billion. A development, he said, was an indication of international investors’ confidence in the Nigerian economy.
External Reserve rises above $34 b The nation’s external reserves, Mr. Emefiele also disclosed, has risen over $ 34 billion. He added that the investors and exporters window of the foreign exchange market has recorded an $18.7 billion inflow since April, this year. According to him, the record was a demonstration of investors and exporters confidence in the foreign exchange policy of the nation, while expressing optimism for a better performance, going forward. Banks remain stable According to him, the overall outlook for the banking system was stable, as banks’ Balance sheets remain strong, in spite of the Non-Performing Loans challenges regarding some sectors.
He added that monetary authorities were putting in place, early warning systems in order to identify vulnerability and to proactively manage any emerging risks in the banking system. The governor said that the monetary authorities wanted a tenacious implementation of the 2017 budget as well as, an early passage of the 2018 budget, in order to positively impact on the overall economic performance. He called for a focused policy measures and an aggressive stance policy implementation in order to strengthen the economic recovery which remained weak.