Abuja - The Monetary Policy Committee (MPC) of the Central
Bank of Nigeria (CBN) on Tuesday retained the Monetary Policy Rate at
11 per cent
The CBN Governor, Godwin Emefiele who announced this at a news
conference in Abuja on the outcome of the MPC meeting, said the apex
bank had no immediate plan to further devalue the Naira.
Emefiele said though for 14 months, oil prices at the international
market had continued to fall, the Federal Government had no immediate
intention to further devalue the Naira.
The media recalls that the Naira was devalued in
November 2014, by 22 per cent from N155 to N168 to a dollar at the
"We don't have any immediate plan to devalue the Naira. However, we are
already working on different scenarios; the models are being worked on."
"With this models, we try as much as possible to look at scenarios
under different crude prices and we will continue to discuss at
management and monetary policy committee level."
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"We will try as much as possible to share our thoughts with the fiscal
authorities to harmonise our positions to ensure that notwithstanding
the drop in crude prices, we can continue to run government and do
business," he said.
Emefiele said the decision to retain the current monetary policies by
members of MPC was unanimous.
"In consideration of the headwinds in the domestic economy and the
uncertainties in the global environment, the committee decided by a
unanimous vote to retain the Monetary Policy Rate at 11 per cent."
"Cash Reserve Requirement (CRR) was retained at 20 per cent, Liquidity
Ratio (LP) at 30 per cent and the asymmetric corridor of +200 basis
points and -700 basis points around the MPR," he said.
The media reports that this is the second time the apex bank will be retaining
the MPR, CRR, Liquidity Ratio and the asymmetric corridor.
Emefiele said the decision to retain the rate was taken to ensure that
the objective of easing lending to the real sector of the economy was
He said while the apex bank had in November taken steps to encourage
banks to lend to the real sector of the economy, the impact of that
decision was yet to be felt.
"The committee acknowledge the continuous excess liquidity in the
system as well as the tendency of the banks to invest excess reserves in
government securities, rather than extend credit to the needed sectors
of the economy."
"To this end, the committee once again urges banks to improve lending
to the real sector as part of their patriotic obligations to the
"We urge them to continue to explore ways of incentivising lending to
employment and growth generating sectors, particularly SMEs."
Emefiele said although CBN had no right to force banks to lend to the
real sector like agriculture, solid minerals and Small and Medium
Enterprises sectors, they would continue to adopt moral suasion.
"Unfortunately, DMBs are in the business to make money and we cannot
regulate their interest rate. And so it can be difficult to really force
them to lend to a particular set of people."
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"But what we can continue to do is to put in place policies that will
encourage them to do so or we can continue to incentivise them by
putting in place policies that will encourage them to do so"
"So it is a free market and we cannot really compel them as it is
expected, but we will continue to try," he said.
According to him, this is why at the last meeting we reduced CRR from 25
per cent to 20 per cent.
"And we insisted that banks can only enjoy the reduction if they
introduce to CBN projects that are targeted at the real sector such as
manufacturing, agriculture and the SMEs."
Emefiele said that the committee had also foreseen a longer period of
low revenue from oil sources which would necessitate hard and
uncomfortable choices for the country.
He said while the episode of low oil prices which occurred in 2005
lasted for a maximum of eight months, the current situation was expected
to continue over a longer period.
It would be recalled that there has been a drop in crude oil prices from
a peak of 114 dollars per barrel in July 2014 to as low as 30.25
dollars per barrel as at January 26, 2016.
The governor said since oil prices had been on a steady decline, certain
trade-offs had to be envisaged and accommodated.
As a result of the drop in oil revenues, Emefiele said the need for
consistent, sound and coordinated macro economic policy had become
He put the balance in the country's foreign reserve at 28 billion