By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) on Tuesday raised the Monetary Policy Rate (MPR) to 12 percent from 11 percent saying the balance of risk is tilted towards the exchange rate.
Also, the MPC narrowed the asymmetric corridor to +200bps/-500bps around the MPR, from +200bps/-700bps.
The cash reserve ratio (CRR) was raised to 22.5 percent, from 20 percent and liquidity ratio was retained at 30 percent.
The MPC says its primary concerns include further decline in global output in 2015, sustained pressure in global financial markets, diminishing domestic output growth, rising inflationary pressures (factors noted to be more structural than monetary), with MPR negative in real terms, thus putting foreign and domestic investments on HOLD and annualised money supply in February below provisional benchmark for 2016.
Other concerns are weak credit to the private sector, Deposit Money Banks (DMBs) reluctant to grant credits to the real sector due to high Non-Performing Loans (NPLs), uncertainty around fiscal policy, adverse external environment, low electricity, insecurity which have continued in the first quarter (Q1) of 2016, excess liquidity in the banking system contributing to pressure in the forex market and previous effort with CRR cut not transmitted to growth sectors.
