Central Bank of Nigeria Leaves Rate at 14%

• Central Bank of Nigeria Leaves Rate at 14%

The Central Bank of Nigeria led monetary policy committee left interest rate unchanged at 14 percent on Tuesday.

The committee cited rising inflationary pressure and falling external reserves as some of the reasons for the decision.

While the economy was projected to grow at 1.75 percent rate in 2018, the committee highlighted slowing economic growth as a threat to recovery following a drop in growth rate from 1.95 percent in the first quarter to 1.50 percent in the second quarter.

The economic slowdown in the second quarter was attributed to the slowdown recorded in the oil sector, with linkages to employment and growth in other key sectors of the economy.

Therefore, taking advantage of rising oil prices to rebuild fiscal buffers, strengthen government finances in the medium term and reverse the current slowdown in output growth will stimulate economic activity and enhance productivity.

Also, the implementation of the Economic Recovery and Growth Plan (ERGP) will create jobs and bridge output gap.

Still, the committee expressed concern over the impact of liquidity injections from election-related spending and increase in FAAC distributions which is rising in tandem with increase in oil receipts.

Due to growing uncertainty ahead of the national election, slowing economic growth and rising interest rate in developed economies, the seven-member committee voted to leave interest rate unchanged at 14 percent. Retain the asymmetric corridor of +200/-500 basis points around the MPR; retain the CRR at 22.5 per cent; and retain the Liquidity Ratio at 30 per cent.