The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), has decided to retain the Monetary Policy Rate, MPR at 11.5%.
This was disclosed by the CBN governor, Mr. Godwin Emefiele while reading the communique in a press briefing, today, November 24, 2020 in Abuja.
MPR is the interest rate at which CBN lends to the commercial banks. The MPR is the benchmark against which other lending rates in the economy are pegged and is usually used as an instrument to moderate inflation in the economy.
Recall that at the end of September, the MPC reduced the MPR by 100 basis points, from 12.5 per cent to 11.5 per cent.
The governor, after the 276th meeting of the MPC, revealed that majority of members voted to leave the current rate to make more money available for lending amid the recession the economy recently slipped into.
Emefiele also assured that CBN’s concentration is on the various efforts that will enable the economy exit the recession soon enough.
Among these efforts, as stated by the governor, is offering low interest rates to corporate organisations and individuals.
According to him, this will lead to a growth in employment rate that in turn promotes to improvement in manufacturing and output.
He went further to note that this effort by the CBN will help supply exceed demand, and ultimately facilitate a drop in the prices of good and services are decreased.
Although, emphasizing that recession is a global phenomena, Emiefiele advised that the government must work harder at diversifying the economy so as to avoid slipping .
He denounced the sole dependence on oil as a nation, stating “we must go back to agriculture and embrace it”.
Emefiele affirmed that agriculture is the way ahead for Nigeria’s economy, explaining that unlike other sectors, agriculture is booming despite the current economic situation.
The 10-man Monetary Policy Committee is the highest policy making committee of the Bank with the following responsibilities.
- Review economic and financial conditions in the economy
- Determine appropriate stance of policy in the short to medium term
- Review regularly, the CBN monetary policy framework and adopt changes when necessary.
- Also communicate monetary/financial policy decisions effectively to the public and ensure the credibility of the model of transmission mechanism of monetary policy.