The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has maintained a hold in Monetary Policy Rate (MPR) at 13.50%. Other parameters such as the Cash Reserve Ratio (CRR), Liquidity ratio and asymmetric corridor are equally held constant.
After the recent cut in the Monetary Policy Rate (MPR) by 50 points in March, all hands were on deck as the CBN Governor, Mr. Godwin Emefiele, read the communiqué at the end of two-day MPC meeting on Tuesday in Abuja.
Highlights of MPC decision:
• MPR is kept at 13.50 percent
• The asymmetric corridor of +200/-500 basis points around the MPR s retained
• CRR is held 22.5 percent; and
• The Liquidity Ratio is also kept at 30 percent.
MPC noted that global and domestic developments have conditioned an environment of low optimism in the macroeconomic and financial sector space, forcing central banks around the world to return to accommodative monetary policy.
The Committee therefore considered the options of whether to be more accommodative, tighten or hold its position.
• MPC felt the recent uptick in inflation should lead to tightening MPR but feared it would constrain Deposit Money Banks (DMBs) to increase access to credit.
• As regard loosening, MPC noted lowering rates would aggressively restart the capital activities, and stimulate growth.
• However, MPC noted there is a need to restrain from loosening in order not to exacerbate inflationary pressures
• Also, MPC noted loosening may expose the economy to liquidity surfeit and without a corresponding increase in real sector output
• Hence, the decision to maintaining the monetary policy rate at its present level became essential, for a better understanding of the momentum of growth before determining any possible modifications.
Despite the 2.01 percent growth in Q1 2019, MPC observed that actual output remains below potential, implying that the economy still had sufficient headroom for non-inflationary growth. T
The MPC stressed that the recent growth in market capitalization reflected new listings in the market, prominent amongst which are MTN and Skyway Aviation Handling Company Plc and additional listing from the merger between Access Bank and Diamond Bank.
The Committee stressed that the Nigerian economy still exhibits some fragility in output growth during the second quarter of 2019. Meanwhile, the committee stated that its revised output projections indicate that the Nigerian economy would grow by 2.38 percent by the CBN in 2019.

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