Mr. Godwin Emefiele, the Governor of Central Bank of Nigeria (CBN), has reported that interest rate would remain unchanged for a long.
He said at the end of a two-day meeting of the Monetary Policy Committee (MPC) in Abuja.
He said that the apex bank was not in a hurry to bring down the Monetary Policy Rate (MPR) otherwise known as interest rate, but would rather take other measures, including the prescription of minimum loan advance by banks to the private sector, to boost growth.
“Like we said, we will like to see inflation trend into single digit territory. That the CBN itself has set an inflation target of between six to nine per cent and because we are still above that threshold, we will only do so cautiously either through signaling; we are not going to be in a hurry to moderate or to bring down the MPR.
“However, without necessarily altering or adjusting the MPR, we can take other measures like the measure that we adopted by prescribing minimum loan deposit ratio to the banks.
“That will help in a drive to increase the loans deposit and indeed, because banks themselves know that if they do not do what we want, as raised in the guidelines, we would take the money that they have and put them in CRR and because they know that it is a big challenge for them, that is why the rates are beginning to trend. There is a price war going on now.”
The CBN governor also reiterated the determination of the apex bank to restrict milk importation, which gulps between $1.2 billion and $1.5 billion annually, describing it as unacceptable.
However, the apex bank, at the end of MPC meeting, resolved to leave the MPR unchanged at 13.5 per cent and held other parameters constant.
It also retained the asymmetric corridor at +200/-500 basis points around the MPR. The Cash Reserve Requirements (CRR) and Liquidity Ratio remained at 22.5 per cent and 30 per cent respectively.
Emefiele, who read the committee’s communiqué, said tightening monetary policy stance was not an option, adding that restriction of the capacity of the deposit money banks to create money could curtail their credit creation capabilities.