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Nigeria may not slide into recession despite impacts of COVID-19—CBN
IN spite of the impacts of the pandemic COVID-19 on the economy, Nigeria’s economy may not slide into recession, the Central Bank of Nigeria (CBN) has said.
At the end of its Monetary Policy Committee (MPC) meeting held Thursday, the apex bank held that the economy would reverse to positive growth by the fourth quarter of 2020 if the current stimulus initiatives are properly implemented.
In a communique signed and issued at the end of the meeting by Godwin Emefiele, the CBN governor, the bank noted that a sharp decline in output growth was expected in Q2 of 2020 which may extend to the third quarter, it expressed optimism that the economy may not slide into recession.
During the meeting, the MPC noted that the imperative for monetary policy at the May 2020 meeting was to strike a balance between supporting the recovery of output growth while maintaining stable price development across inflation, the exchange rate and market interest rates.
The Committee noted that the Cash Reserve Requirement (CRR) was recently adjusted upwards as a means of tightening the stance of policy.
In its response to the COVID-19 pandemic, however, the Bank reduced interest rates associated with all CBN interventions from 9 to 5 per cent.
Members of the committee agreed that increasing Monetary Policy Rate (MPR) at “this stage will thus be counter-intuitive and will result in upward pressure on retail market rates.”
While ending the meeting, the Committee decided by a unanimous vote to reduce the Monetary Policy Rate (MPR) and to hold all other policy parameters constant.
At the end of the meeting, the MPC voted to reduce the MPR to12.5per cent; retain the Asymmetric Corridor of +200/-500 basis points around the MPR; retain the CRR at 27.5 per cent, and retain the Liquidity Ratio at 30 per cent.