The Central Bank of Nigeria (CBN) has retained all the monetary policy rates in line with the advice of the International Monetary Fund (IMF) even as it banned Bureau-De-Change Operators for nefarious activities.
The apex Bank’s Monetary Policy Committee (MPC) has at its yesterday’s meeting kept constant, the Monetary Policy Rate (MPR), a nominal anchor following the ongoing inflationary pressure and the need to monitor the underlying pricing mechanism
By this, the Committee voted to retain the MPR at 11.5 percent , the last rate it had since September 2020, asymmetric corridor +100 -700 basis points, cash reserve ratio (CRR), 27.5% and liquidity ratio, 30%.”
Godwin Emefiele, governor of the apex bank, announced the committee’s decision at the end of a two-day meeting at the CBN headquarters in Abuja.
“The MPC made the decision to hold all policy parameters constant. Committee thus decided by a unanimous vote to retain monetary policy rate at 11.5%,” Emefiele said.
The World Economic Outlook (WEO) released on Tuesday, IMF advised central banks to look through transitory inflation pressures and avoid tightening until there is more clarity on underlying price dynamics.
“Clear communication from central banks on the outlook for monetary policy will be key to shaping inflation expectations and safeguarding against premature tightening of financial conditions,” IMF said. The institution has rejected the projected growth of 2.5 percent for Nigeria in 2021 on the slow rollout of vaccines.
Yesterday, the apex Bank also banned issuance of licence for Bureau de Change operation and announced plan to operate Teller Centers. But analysts have expressed fears that the ban might lead to further devaluation of the Naira as it happened in 2016. For instance, in 2016, Naira was exchanging at N268/$1 in January, but the ban of Bureau de Change Operators brought it to N495/$1 by December that year. It is believed that CBN may have to inject more supply of forex into the system to avert a repeat of 2016 experience.
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