Nigeria's central bank continues to hold interest rate at 14% to ensure forex stability
The CBN MPC said further tightening would strengthen the impact of monetary policy on inflation with complementary positive effect on capital flows and exchange rate stability
The MPC retained MPR which was at 14%, Cash Reserves Ratio at 22.5%, Liquidity Ratio which was left at 30%; and the Asymmetric Window which was left at +200 and -500 basis points around the MPR.
Godwin Emefiele, CBN Governor announced the decision of the committee at the end of a two-day meeting held in Abuja, the bank’s headquarters.
He stated that nine members of the committee, including the newly confirmed ones, unanimously agreed to maintain the current monetary policy stance.
“Committee was of the view that further tightening would strengthen the impact of monetary policy on inflation with complementary positive effect on capital flows and exchange rate stability."
“Nevertheless, it could potentially dampen the positive outlook for growth and financial stability. Committee is of the view that loosening will strengthen the outlook for growth by stimulating domestic aggregate demand through reduced cost of borrowing.
“This may however lead to a rise in consumer prices, generating exchange rate pressures on the currency in the process", Emefiele said.
The committee believes that key variables have continued to evolve in line with the current stance of macro-economic policy and should be allowed more time to fully manifest.
The Committee had held the key lending rates constant for the past one year to support the Naira and curb inflations.
Other African countries lowered its rates in March
Ghana cut its benchmark interest rate to the lowest in four years as inflation is slowing toward the central bank’s target.
The Bank of Ghana recently reduced the rate by 200 basis points to 18 percent, the lowest in four years as the country's inflation slows towards the target of the country's apex bank.
The Monetary Policy Committee lowered the Central Bank Rate (CBR) to 9.50 percent at its meeting three weeks ago.
The MPC noted that inflation expectations were well-anchored within the government target range, the increased optimism for growth prospects in the economy and that economic output was below its potential level,” central bank Governor Patrick Njoroge said in an emailed statement on Monday.
In South Africa
South Africa, last week, cut its repo rate by 25 basis points to 6.5%, the prime lending rate, which is the interest charged by banks to clients, now at 10%.
Consumer inflation, which the bank uses as a guide for deciding rates, has remained within the bank's target of 3% to 6% for the past year and is expected to average 4.9% this year.
Omotola Abimbola, a Research Analyst at Afrinvest West Africa told Business Insider Sub Sahara Africa that the CBN MPC's decision to hold interest rate will not affect the market.
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