- CBN Leaves Interest Rate Unchanged at 14%
The Central Bank of Nigeria led Monetary Policy Committee on Tuesday left interest rates unchanged as widely anticipated.
The CBN Governor, Mr Godwin Emefiele, who announced the decision of the committee at the apex bank’s headquarters in Abuja said the committee left Monetary Policy Rate unchanged at 14 per cent, while the Cash Reserves Ratio was left at 22.5 per cent.
Also, Liquidity Ratio was retained at 30 per cent; Asymmetric corridor at +200 and -500 basis points around the MPR.
The governor said the committee strongly considered tightening monetary policy to further curtail the threat of a rise in inflation and sustain capital inflow in the face of sustained monetary policy normalization in the US.
According to him, despite the deceleration in headline inflation, the 11.23 per cent inflation rate recorded in June remains above the apex bank’s 6-9 per cent target range. This, he supported with the possible implementation of approved 2018 budget, N9.12 trillion, pre-election spending and injection from fiscal authorities, which are expected to provide the economy with additional liquidity that could pressure consumer prices even more. Therefore, the committee believed higher interest rates would rein-in inflationary pressure towards projected single digit, build investors’ confidence and stabilize the foreign exchange market.
On the contrary, the committee was of the view that while raising interest rates could curtail inflation rate at this time, it would weaken consumption, reduce new investments, and trigger the re-pricing of financial assets by deposit money banks, thus limiting credit funding to the real sector.
However, in response to various calls for lower interest rate, the governor said lower monetary policy rate would aid consumption but hurt capital inflows, disrupt foreign exchange, and escalate inflation rate as liquidity to the economy is expected to increase once the federal government commence implementation of the 2018 budget.
Therefore, the seven of the ten-member committee voted to maintain current MPR, while two voted for 50 basis points increase, the remaining member voted for 25 basis points raise. Suggesting that the committee is likely to hike rate in the fourth quarter depending on the implementation of the 2018 budget, the level of pre-election spending, and the state of global economy, especially the U.S monetary policy, Brexit negotiation and global trade tensions.
PoS Transactions Decline by N97 Billion in April
PoS Transactions Depreciated by N97bn in the Month of April
The Central Bank of Nigeria (CBN) said payments across the nation’s point of sale terminals declined by 26.2 percent in April when compared to March.
The federal government had imposed a lockdown on activities in Lagos, Ogun and Abuja on March 31, 2020 to curb the spread of the COVID-19 pandemic in Nigeria.
The lockdown weighed on economic activities and plunged PoS transactions by N96.7 billion in the month of April.
In the report put together by the central bank, data covers cheques, ATM, PoS, E-bills and NIP transactions for the month of April and excluded channels such as Web, Mobile, and NEFT.
The data collected by the apex bank showed the total volume of transactions declined from 251.9 million in March to 186.6 million in the month of April. The lowest since February 2018 when the volume of e-payments drops to 159.9 million.
Similarly, transaction values dipped by N4.6 trillion or 37.7 percent from N12.3 trillion in March to N7.6 trillion in April.
A break down of the report shows the value of PoS transactions depreciated by N96.7 billion or 26.2 percent from N368.9 billion in March 2020 to N272 billion in April.
Government Deficit Spending Rises by 144% to N609bn in Two Months
Deficit Spending Rises by 144% to N609bn in January, February
Federal Government deficit spending rose by 144 percent year-on-year in the first two months of the year to N650 billion, up from N250 billion in the same period of 2019.
In the monthly economic report released for the months of January and February 2020 on Tuesday, the Central Bank of Nigeria said the sharp increase was due to a 54 percent increase in the Federal Government’s expenditure from N798.9 billion in the corresponding period of 2019 to N1.22 trillion in 2020.
The report also noted that the increased erased the 13 percent increase recorded in retained revenue from N548.9 billion in the same period of 2019 to N619.3 billion in January and February 2020.
Breaking down fiscal activities, the CBN said “At N325.54 billion, the estimated Federal Government retained revenue for the month of January 2020 was below the monthly budget of N705.44 billion by 53.9 per cent.
“At N587.05 billion, the estimated total expenditure of the Federal government was below the monthly budget estimate of N865.31 billion by 32.2 per cent. It was also below the N757.07 billion recorded in the preceding month by 22.5 per cent.
“At N293.80 billion, the estimated Federal Government retained revenue for the month of February 2020 was below the monthly budget estimate of N705.44 billion by 58.4 per cent.
“At N641.08 billion, the estimated total expenditure of the Federal Government was below the monthly budget estimate of N865.31 billion by 25.9 per cent. It was, however, above the N587.05 billion recorded in the preceding month by 9.2 per cent.”
AfDB Appoints Rabah Arezki As Vice President
The African Development Bank Group has appointed Rabah Arezki as Chief Economist and Vice President, Economic Governance and Knowledge Management.
The appointment takes effect from October 1, 2020.
According to a press release from the Bank, Dr. Rabah Arezki hails from Algeria and his presently the Chief Economist for Middle East and North Africa Region at the World Bank.
At the World Bank, he led the development of the bank’s “moonshot approach” for the Middle East and Africa which aims to achieve full internet and digital payment connectivity. He championed the agenda on fair competition, data and transparency to empower and unlock the potential of the region’s youth.
Arezki started his career at the International Monetary Fund as an Economist and became the Chief of the Commodities and Environment Unit in the Research Department.
provided leadership on IMF’s rapid response to the historical collapse in oil prices that started in 2014..
He is a senior fellow at Harvard University’s John F. Kennedy School of Government, an external Research Associate at the Oxford University, UK, a research fellow at the CESifo, a global independent research network. Mr Arezki is also a resource person for the African Economic Research Consortium and a Research Fellow at the Economic Research Forum.
He has been a non-resident Fellow at the Brookings Institute, USA.
Forex1 week ago
Naira-USD Exchange Rate to Hit N430 – Report
Finance1 week ago
DSS Arrests EFCC, Acting Chairman, Magu
News6 days ago
British High Commission to Start Accepting Visa Applications From Nigerians Soon
Forex1 week ago
CBN Starts Using N380/$ Official Rate, Expects to Make it Official Soon
Finance1 week ago
CBN Spends $11.5bn in Q1 2020 to Support the Economy and Dwindling Naira
Business6 days ago
Seplat Appoints Emeka Onwuka as CFO, Executive Director
Stock Market1 week ago
Why You Should Monitor Insider Dealings as a Nigerian Stock Trader
Government7 days ago
FG Approves N109bn Contracts for Four Roads, Hostel