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CBN eyes economic recovery, holds interest rate at 11.5%

MPC expected to hold but no members, meeting calendar

The Central Bank of Nigeria (CBN) on Tuesday retained its benchmark interest rate at 11.5 percent after the first Monetary Policy Committee (MPC) meeting of the year.

The move is to sustain growth recovery, despite the sudden rise in inflation rate, which accelerated by 23bps last month to close the year at 15.63 percent after eight consecutive months of decline.

Africa’s largest economy, Nigeria, grew by 4.03 percent in the third quarter (Q3) 2021, representing a slower growth to 5.01 percent recorded in the previous quarter according to the National Bureau of Statistics (NBS).

Read also: External reserves decline to 3-month low on CBN’s FX market intervention

The CBN has kept the MPR at 11.5 percent since September 2020 from 12.5 percent previously.

Nigeria’s inflation rose for the first time in nine months to 15.63 percent in December 2021, according to data from the NBS.

Members of the MPC also voted to retain the asymmetric corridor of +100/-700 basis points around the MPR; the CRR at 27.5 per cent; the Liquidity Ratio at 30 per cent.

The MPC members believe that the existing monetary policy stance has supported the growth recovery and should be allowed to continue for a little longer for consolidation to achieve the MPC mandate of price stability that is conducive for sustainable growth.

The Committee also feels that a hold stance will enable it to carefully appraise the implications of the unfolding global development around policy tapering and normalization by advanced economies