By Yakubu LAAH InvestAdvocate

Lagos (INVESTADVOCATE)-The Nigeria’s Central Bank Tuesday retained the Monetary Policy Rate (MPR) at 12 percent (12%), this is coming on the heels of the CBN Communiqué No. 90 of the Monetary Policy Committee (MPC) meeting.

As part of the decisions, the MPC by a vote of 9 to 1 held the MPR at 12%. However, one (1) member voted for a 50 basis points reduction;

Also, by a vote of 9 to 1, the MPC maintained the symmetric corridor around the MPR at +/-2% and one (1) member voted for an asymmetric corridor.

Again, at the MPC meeting, there was unanimity to retain the Cash Reserve Requirement (CRR) at 12% and 9 to 1 to introduce a 50% CRR on public sector deposits.

According to the CBN, this will be applied on Federal, State and Local Government deposits and all MDAs, for other deposits CRR will remain at 12%.

At the MPC meeting, the CBN affirmed that inflationary pressures continued to moderate partly in response to the tight monetary policy and base effect.

The CBN affirmed that the year-on-year headline inflation decelerated to 8.4% in June from 9.0% in May. “Also, core inflation declined significantly to 5.5% in June from 6.2% in May and 6.9% in April.

“Food inflation, however, rose to 9.6% in June from 9.3% in May 2013, notwithstanding the moderation in headline inflation, there are benign risks on the horizon, including the possibility of accelerated fiscal releases in the later part of the year and the effects of the upward review in electricity tariffs in line with the MYTO following the implementation of the full deregulation of the energy sector,” the MPC said.

The Committee considered the inflationary outlook for the rest of the year as benign. The MPC affirmed that principal risks remain largely due to the loose fiscal stance and rising deficit, excess liquidity in the banking system and risks to the exchange rate due to a combination of revenue shocks and external developments.

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