Jan 20, 2014/CBN

MPCs Considerations

The Committee noted with satisfaction the growth performance of the economy as well as the year-end inflation outcome. It was, however, concerned about a number of risks including the security challenge in parts of the country, which has continued to disrupt farming and related activities; and the sustained decline in oil GDP.

With regard to inflation, the Committee noted the recurring challenge of excess liquidity in the banking system and the possible complications arising from capital flow reversal, as well as the demand pressure in the foreign exchange market.

On the external front, falling oil prices, slowing global output recovery, divergent monetary policy postures between the US and

Euro Area as well as non-inclusive growth remains very important risks.

Gradual normalization of monetary policy by the US Federal

Reserve could exacerbate the current retrenchment of portfolio flows and increase pressure on currencies in emerging and developing countries including Nigeria.

In the light of the above considerations, the Committee observed that its decisions of November 2014 needed time for the effects to crystallize in the economy and therefore, voted to retain the current position.

Consequently, the Committee decided as follows:

MPCs Decision

(1) All eleven members voted to retain the MPR at 13 per cent; retain the CRR on Private Sector deposits at 20 per cent; retain CRR on Public Sector deposits at 75 per cent; and retain the liquidity ratio at 30 per cent.

(2) One member, however, voted for an asymmetric corridor around the MPR.