MPC meets today on second half economic blueprint


By , Abuja Monday, 5 Jul 2010 


There are strong indications that the Monetary Policy Committee of the Central Bank of Nigeria, which will hold its meeting in Abuja on Monday (today), to unveil the economic blueprint for the second half of the year, may leave the Monetary Policy Rate unchanged at six per cent.


The MPR is the anchor rate at which the CBN lends to Deposit Money Banks.The committee had at its last two meetings held on March 2 and May 11 this year unanimously left the anchor rate unchanged at six per cent.


Investigation revealed that the need to keep the MPR unchanged was to enable the apex bank maintain and extend the focus of stability and avoid decisions that might cause disruptions in the progress made in the sector within the last one year.


The CBN Governor, Mr. Lamido Sanusi, had last week gave credence to this when he said, “We have stopped the hemorrhaging. The hole is not getting any deeper and there is no compelling reason to change rates. It would be wise not to disrupt the balance.”


The committee had since the beginning of this year left the MPR unchanged as part of measures to boost lending to the real sector.Since the bail-out of the sector by the apex bank last year, banks’ lending to the economy had been slow to recover.


It was also learnt that the meeting would among other issues, consider the modalities for the smooth take off of the Asset Management Company, which is expected to clean up the toxic assets of the rescued banks; inflation outlook in the short-to medium term, as well as the progress made by the rescued banks in their bid for recapitalisation.


The AMCON bill, which was harmonised last week by both changers of the National Assembly, is awaiting the assent of President Goodluck Jonathan.It will cost about N750bn to purchase the bad debts hanging around the rescued banks.


Our correspondent also gathered that the meeting would consider whether to exit some of the excess liquidity occasioned by monetary expansion as a result of increased government spending, as well as consider the need to do some tightening.





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