CBN Retains Benchmark Lending Rate At 27.5% Amid Inflation Pressure

The Central Bank of Nigeria (CBN) has retained its benchmark lending rate at 27.5 per cent, citing ease of inflation and foreign exchange improvements.

The decision was reached at the 300th Monetary Policy Committee Meeting held on Tuesday.

The apex bank governor, Olayemi Cardoso, said the committee was unanimous in its decision to retain the Monetary Policy Rate.

The CBN had, at the last MPC meeting retained the benchmark interest rate at 27.50 per cent.

At the 300th meeting, the MPC also retained the asymmetric corridor around the MPR at +500/-100 basis points.

The apex bank also retained the Cash Reserve Ratio of Deposit Money Banks at 50 per cent and Merchant Banks at 16 per cent and retained the Liquidity Ratio at 30 per cent.

He said the decision was influenced by a positive balance of payments position and the relative stability observed in the foreign exchange market.

Cardoso said, “The MPC noted the relative improvements in some key indicators which are expected to support the overall moderation in prices in the near to medium term. These include the progressive narrowing of the gap between the Nigeria foreign exchange market, NAFEM, and the windows

“The committee, however, acknowledged underlying inflationary pressures driven largely by high electricity prices, persistent foreign exchange demand pressure, and other legacy structural factors.”

Cardoso said the committee also called on the fiscal authority to strengthen current efforts at enhancing foreign exchange earnings, especially from gas, oil, and non-oil exports.

However, he noted the impact of falling crude oil prices on the Nigerian economy.

“The MPC, however, expressed concerns about a recent decline in crude oil prices attributable to increased production by non-OPEC members, as well as uncertainties associated with US trade policy, which present new challenges for fiscal receipts and budget implementation,” he decried.

He said the MPC are confident on the stability of the banking sector, adding that banks are cooperating with the recapitalization exercise.

The apex bank boss said the committee reaffirmed the continued stability of the banking system, “following notable improvements in key performance indicators and observed the appreciable progress in the ongoing recapitalization exercise.

“Members thus called on the bank to sustain its effective oversight of the industry to ensure compliance with regulatory and macro-prudential guidelines.”

CBN Retains Benchmark Lending Rate At 27.5% Amid Inflation Pressure is first published on The Whistler Newspaper