CBN Retains MPR At 11.5%，Expects Economy To Recover From Recession By End Of 2020
By UDO ONYEKA
In line with expectations of many market analysts, the Monetary Policy Committee, MPC, having faced with the choices of tightening, loosening and maintaining monetary policy stance unianimously elected to retain the monetary policy rate at 11.5 per cent.
It also retains the Asymmetric corridor around the MPR at+100/-700bps, retains the cash reserve ratio, CRR at 27.5 per cent and the ljquidity ratio, LR at 30 per cent.
The MPC of the CBN unanimously voted to hold the monetary policy variables hinged on its most pressing needs – driving the economy back into growth, and achieving medium-term macroeconomic stability.
The Committee on domestic economy attributed the 3.62 per cent y/y decline in GDP in Q3-20 to low oil prices as well as the lingering effects of the COVID-19 pandemic on the economy.
However the committee expressed optimism on output growth in Q4-20 due to expected gains from its dovish monetary policy and fiscal stimulus initiatives implemented by the government.
The CBN said it expects the economy to recover from the recession by the end of 2020, while reiterating that supply-side factors remain the predominant drivers behind the surge in inflation.
The committee further highlighted that persistent security challenges across the country, as well as lingering structural deficiencies impacting the moving of food items from the rural to the urban areas, have amplified the upward pressure on domestic prices.
Other factors highlighted include the recent hike in PMS and electricity tariff.
It now expects inflation to moderate by the end of Q1-21 as domestic production is expected to recover following the resumption of economic activities post-COVID lockdown.
