- MPC retains interest rate at 11.5%
Central Bank of Nigeria (CBN) says Nigeria is not negatively affected by capital flight because of its robust monitoring of the exit of portfolio investors.
CBN Governor Godwin Emefiele, who said this, also stated that the Monetary Policy Committee (MPC) decided during its meeting to retain interest rate at 11.5 per cent.
He spoke with reporters in Abuja yesterday.
He said: “What we have been doing is to see to a gradual, systematic and orderly exit of foreign portfolio investors from the country”.
Some of the portfolio investors, according to him, “felt the yields are not as high as they expected.”
Emefiele added that the portfolio investors “also expected that there should be some more edging instrument that will protect them in case they want to go out.”.
The CBN boss stated that “the funds that will be leaving as a result of policy normalisation from the advance economy did not come to Nigeria and so as they withdraw them, there is nothing to withdraw out of Nigeria because we are not part of that game.
Emefiele also insisted that “there is no reason for the MPC to begin to contemplate policy of tightening because we see that we are somewhat moderately tightening the liquidity system through our control and use of Cash Reserve Ratio (CRR) discretionary powers that we have.
He explained that “ the reason MPC thinks that we will continue to do what we are doing now is because we believe it is giving us the results that we expect”.
The CBN governor also said the apex bank was doing “everything possible to make sure that we don’t go in that direction because we believe in what we are doing, in the last eight months we’ve seen inflation moderating, we believe that what happened in December is temporary and we have looked at various issues”.
He said the CBN has found out “that prices at farm gate are in line with our expectation because they are somewhat moderated however prices at the market where our statisticians take their survey are highs so if prices at the market are high, there is, therefore, some problems between the farm gate and the market”.
The problem the CBN sees, according to him, are “logistical problems essentially bordering on transportation essentially also bordering on the destruction of food produced or perishable items from farm to market.”
He stated that the CBN was doing everything possible to encourage people interested “in looking at how to resolve the logistical problems of delivering food from farm to market to come in and take advantage of some of those interventions that we have”.
The CBN boss pointed accusing fingers at hoarders who, he said, “are here playing their games …to the detriment of innocent Nigerians”.
He also said that people who collect loans from unsupervised and unrecognised loan sharks were taking a big risk.
“There is no need for you to go to loan sharks for a loan. People normally go to loan sharks because they are desperate and can’t access the bank or microfinance banks,”Emefiele added.
He said that the CBN has put in place, an avenue through which people in need of cash can raise loans.
The avenue, according to him, is the “ target credit facility or the SMEs loan that was set up through our microfinance banks.”
Emefiele disclosed that MPC members agreed to retain the Monetary Policy Rate (MPR) at 11.5 per cent; Asymmetric Corridor of +100/-700 basis points around the MPR; CRR at 27.5 per cent; and Liquidity Ratio at 30 per cent.
He added that the reason for holding onto the old parametres indicated “a conservative but cautious and consistent policy choice given the prevailing economic conditions and outlook, thus strengthening policy credibility and focus”.
Members of the MPC also felt that “a hold would signal MPCs realisation of the fragility of the growth recovery and its sensitivity to emerging global and domestic uncertainties.”
