The Central Bank of Nigeria (CBN) has retained the monetary policy rate (lending rate) at 12 per cent.
CBN governor Sanusi LamidoSanusi made the announcement on Tuesday in Abuja after the bank’s Monetary Policy Committee meeting.
The News Agency of Nigeria (NAN) recalls that this is the fifth consecutive time the apex bank is leaving the key monetary policy indicators unchanged.
The committee decided to ``retain the monetary policy rate (MPR) at 12.00 per cent with symmetric corridor at plus/minus 200 basis point by a vote of 10 to 1’’.
``It voted by a decision of 10 to 1 to increase the Cash Reserve Requirement (CRR) from 8.0 per cent to 12.0 per cent with effect from July 25,’’ he said.
According to him, the committee unanimously agreed to reduce the Net Foreign Exchange Open Position to 1.0 per cent from 3.0 per cent with immediate effect.
He said that increasing the CRR was in line with efforts made by the apex bank to ensure stability in the money market.
He added that the committee was faced with a serious challenge of lowering the rate but felt that lowering it in the face of the slow growth output and global growth prospect would weaken the exchange rate.
Sanusi noted that it would also adversely affect the reserve, especially now that the country needed to build buffers against external shocks.
He added that leaving the MPR unchanged was also against the backdrop of the upward inflation forecast by the bank.
``Inflation is expected to average 12.0 per cent during the next six months with core and food inflation being much higher.
``The forecast is mainly due to the increase in electricity tariff and the tariff on imported rice and wheat,’’ he said.
On external sector development, Sanusi said that the gross external reserve as at July 19 stood at 37.16 billion dollars, representing an increase of 0.33 billion dollars.
This, he said, was over the level of 36.83 billion dollars as at the end of May 2012.
``The exchange rate at Wholesale Dutch auction System (WDAS-SPT) opened at N157.26 on May 21 and closed at 157.43 on July 12, representing 0.11 per cent depreciation during the period.
``At the inter-bank segment, the selling rate opened at N158.80 and closes at N161.20, with a period average of N161.60, representing a depreciation of N2.40 or 1.51 per cent.
``At the Bureau De Change (BDC) segment of the market, the selling rate opened at N160 and closes at N163.00, representing a depreciation of N3 or 1.87 per cent for the period,’’ he said.
He said that the apex bank had intervened significantly in the inter-bank market to ensure stability.
On key domestic macro-economic and financial development, he said the committee had noted, with concern, the decline in the contribution of oil to the nation’s GDP.
``The non-oil sector remained the major driver of growth recording 7.52 per cent increase in contrast to the oil sector which contracted by 0.24 per cent.
``The committee noted sustained slowdown in the growth in the agricultural output of 4.08 per cent in the second quarter compared with 4.15 per cent in the first quarter,’’ he said.
This, the governor said, could be traceable to the continued security challenges which had affected a large part of the farming population of the country.