The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has voted unanimously to retain the benchmark interest rate (MPR) at 11.5 per cent, keeping all other parameters constant.
This was revealed by the CBN Governor Godwin Emefiele during the press briefing of the 283rd committee meeting held in Abuja on Tuesday.
Similarly, the Cash Reserve Ratio (CRR) was left at 27.5 per cent, while the liquidity ratio was put at 30 per cent. Also, the asymmetric corridor of +100/-700 basis points around the MPR was retained
Emefiele noted that the growth recovery for the domestic economy was strong in 2021 and expected it to progress reasonably in 2022, following considerable improvements during the third quarter of 2021 and a positive outlook for the fourth quarter of 2021, as monitored by The ICIR via YouTube.
However, the governor stated that the rising inflationary pressure and gradual withdrawal of monetary and fiscal stimulus could dampen the recovery expected in 2022. He said that growth in emerging markets was expected to slow in 2022 due to a low level of vaccination and limited policy support.
He attributed the high inflation to exchange rate pressures and supply bottlenecks associated with COVID-19 restrictions.
“In price development, the MPC observed that inflation in most advanced economies would remain high and unlikely to abate in the short to medium term.
“This is driven by the persistence of supply side disruptions and pent-up demand associated with recovery from the virus. In emerging markets and developing economies, inflation has also remained high due to a combination of persisting exchange rate pressures and supply bottlenecks associated with lockdown restrictions.”
He expected the economy to remain on the path of positive growth given the impressive performance in the third quarter of 2021 and continued rebound in economic activities.
He said that the MPC noted the significant improvement in the Manufacturing Purchasing Managers Index (PMI), which rose to 52.0 index points in December 2021, compared with 50.8 index points in November 2021, reflecting a continuing economic recovery driven by increasing business activities in the economy which improved employment and production levels.
A recent ICIR analysis identified CBN policies as responsible for worsening poverty, food inflation and foreign exchange scarcity in the nation.
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