The monetary policy committee of the Central Bank of Nigeria (CBN) on Tuesday, unanimously voted to retain the monetary policy rate (MPR), which determines interest rate, at 11.5 percent.
Godwin Emefiele, governor of the CBN, announced the committee’s decision at the end of its two-day meeting.
The monetary policy committee (MPC) also retained the Liquidity Ratio at 30 percent and Cash Reserve Ratio (CRR) at 27.5 percent.
Holding key parameters is expected to boost consumer spending by increasing credit facilities to households, small medium enterprises (SMEs), health, agricultural, and the manufacturing sector and stimulate the economy.
This will also encourage borrowing, as lending rate by banks is expected to remain low.
The MPC also warned the federal government against total lockdown of the economy, following the rising number of COVID-19 cases in the country. This it noted may reverse the gains of economic stimulus achieved in 2020.
Emefiele described a statement by Fitch, a credit rating agency, that sustained use of direct financing from the CBN to fund budget deficit could raise risks to macroeconomic stability, as “unfair and unfortunate to hold such views”.
Noting that the CBN is a banker to the government and lender of last resort to banks that face short term liquidity challenge.
MPC urged the CBN to further expand its current stimulus packages to support the fiscal interventions to reflate and boost recovery in the economy.
Noting that large stimulus packages have been deployed by many countries to fast-track growth recovery and
restore livelihoods across the world.
“For instance, Japan provided stimulus package valued at 66.9 per cent of its 2019 GDP; UK, 45.04 per cent; USA, 28.4 per cent; Brazil, 27.6 per cent; South Africa, 12.6 per cent; China, 11.5 per cent; India, 10.0 per cent; and Russia 7.1 per cent compared with Nigeria’s paltry 4.0%.”