The Central Bank of Nigeria (CBN) has expressed determination to end the current recession by the end of the year as it holds its benchmark interest rate to allow previous cuts to flow through the economy.
All 10 members of the monetary policy committee who attended the two-day meeting today, November 24, voted to keep the rate at 11.5%.
The apex bank’s Governor, Godwin Emefiele said in a virtual news briefing from the nation’s capital, Abuja, emphasized that the pause following two cuts of 100 basis points each in 2020 signaled that the nation’s second recession in less than four years will be short-lived.
Emefiele said that holding rates “will allow current policy measures to permeate the economy.”
The twin impact of coronavirus lockdowns and the plunge in the price of oil hit the West African economy harder than most on the continent. That came on top of land borders that have been closed since last August in an attempt to curb smuggling and boost local production. This has weighed on Nigerian exports and on the supply of some food products, adding to inflation.
Although inflation has been above the central bank’s target band of 6% to 9% for more than five years, and quickened for a 14th straight month in October, this should start moderating in the medium term, according to the MPC. Food-price growth, that has been a key driver, is expected to ease, Emefiele said.
The committee kept the cash reserve requirement at 27.5%, held the liquidity ratio at 30% and retained the asymmetric corridor, which means the cost at which lenders borrow is at 100 basis points above the monetary policy rate and the return on their deposits at 700 basis points below the benchmark.