BEVERLY HILLS, March 22, (THEWILL) – The Central Bank of Nigeria, CBN, on Tuesday ended its Monetary Policy Committee, MPC, meeting, insisting that the naira will not be devalued even as it raised Monetary Policy Rate, MPR, to 12 percent from 11 percent in response to the increase in inflation that was recorded in February.
While noting that one of the reasons for the high inflation of 11.38 percent in the economy is the increase in the electricity tariff, the bank blamed delay in passage of 2016 budget as part of the reasons for uncertainties and depression within the economy and urged the national assembly to hasten the passage.
Communicating the decision of the committee to the press in Abuja, the CBN governor, Godwin Emefiele assured that the bank would maintain its “development finance policy” of supporting the real sector of the economy.
The committee decided “to raise MPR (monetary policy rate) by 100 basis point from 11 percent to 12 percent, to raise CRR (cash reserve ratio) by 250 basis point from 20 percent to 22.15 percent; retain liquidity ratio at 30 percent”.
“The committee also urged speedy passage of the 2016 budget in order to halt the depressing effect of the uncertainty that engulfs the waiting period,” Emefiele said.
While expressing hope “that the implementation of the budget would go a long way boosting investors confidence and reinvigorating the financial market,” he explained that the decision to tighten money supply was because the balance of risk was against inflation.
The Governor also dispelled speculation suggesting that the CBN was on the verge of converting to naira the forex exchange of bank customers in domiciliary accounts, saying “That will never happen…. We cannot do that… That would compound our economic challenges…”
