By Christel Odili
The Monetary Policy Committee (MPC) for the 14th consecutive time, retained the Monetary Policy Rate (MPR) at 14 per cent.
The Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele made this known at a news conference on Thursday, in Abuja on the outcome of the 264th MPC meeting.
Emefiele said all 11 members were present at the meeting and they all voted to retain the MPR, which was last changed in July 2016.
The Cash Reserves Ratio ( CRR) remained unchanged at 22.5 per cent, liquidity at 30 per cent and Asymmetric corridor at +200 and -500 basis points around the MPR.
“The committee underscores that by holding its policy position constant, it has confidence in the various policies and administrative measures deployed by the Bank which have resulted in the moderation in domestic price levels and stability in the foreign exchange rate.
“Thus, a hold position is an expression of confidence in the policy regime, given the gradual improvements in both output growth and price stability.
“On this premise, the downside risks to growth and upside risks to inflation appears contained.”
He said that the committee noted that the economy was on the right path but some key sectors continued to experience significant challenges.
“The MPC, however, expressed concern about the tepid growth expectations and growing uncertainty in the global financial markets.
“These uncertainties are arising from the poor reception of the Brexit deal by British politicians, continuing trade war between the U.S. and her major trading partners, as well as the commencement of U.S. sanctions on Iran.”
Emefiele said that the committee believed that although the domestic economy was recovering modestly from recession, however, the recovery was tepid and efforts should be stepped up to strengthen aggregate output and demand.
“In this regard, the committee urged the CBN to deepen and broaden access to finance to high employment elastic sectors with particular emphasis on small and medium scale enterprises.
“The committee called on the CBN to extend the success recorded under the Anchor Borrowers Programme to other items, including fish and palm oil, by introducing more stringent measures to curb access to foreign exchange for products that can be produced within Nigeria.”
Emefiele said that the MPC welcomed the moderation in inflation in October, reflecting declining food prices.
He said that the committee believes that given the negative output gap, the proposed increase in the national minimum wage would stimulate output growth due to prolonged weak aggregate demand arising from salary arrears and contractor debt.
According to him, consequently, its impact on the aggregate price level will be largely muted, given that the monetary aggregates have largely underperformed in fiscal 2018.
e added that the prevailing stability in the foreign exchange market would continue to moderate pressures on the domestic price level.
On the overall outlook and risks, the CBN governor said forecasts of key macroeconomic variables indicate a positive outlook for the economy in the fourth quarter of 2018.
He said that the committee expects that the effective implementation of the Economic Recovery and Growth Plan (ERGP) and the 2018 budget, improvements in the security challenges, enhanced flow of credit to the real sector and stability in the foreign exchange market would redirect the economy on a path of inclusive and sustainable growth.
He also said that increased production in the oil and the non-oil sectors were expected to drive output growth in the medium term.
“The inflation outlook suggests continued but moderate inflationary pressure to the end of 2018, based largely on increased consumer spending for the Christmas festivities, election-related expenditure and increased pace of implementation of the 2018 Federal government budget.
“Improvements in the security, increased harvests as well as a stable exchange rate are expected to moderate the rise in inflation.
“Overall, the outlook for the economy remains positive with a growth projection of 1.75 per cent in 2018”, he said.
Emefiele also warned Deposit Money Banks (DMBs), to be extremely careful in the electioneering period to not violate the money laundering Act or risk penalty.
He said that the bank’s stance on the 2019 election was very explicit on the issue of money laundering.
“Money laundering issues may arise, and haven advised them to be very careful, I believe they will be careful themselves because they have been told that if they are caught on issues like this, they will be heavily penalised.
“On lending, of course when you say bank lending to politicians, banks have their risk acceptance criteria and I do not think the banks will do that at this time, everybody must have learnt their lessons.
“We at the CBN are watching and if things go wrong or are about to go wrong we will deal with it as appropriately as possible.”
On the issue of MTN’s repatriations from Nigeria, he said it was being resolved as the apex bank and the organisation was at the verge of reaching agreements.
“There is rationale for the decision we took because we expected certain documents to be submitted.
“Those documents have now been submitted and these matters will be resolved. We have held meetings with the MTN group and we are at the verge of reaching agreements and at the appropriate time the agreement reached will be announced.
“The sanctity of the Certificate of Capital Importations (CCIs) that are being issued by our banks to our foreign investors remain sacrosanct and no other company or person is being investigated on the issue of CCI, this is an isolated matter.”