Governor of the Central Bank of Nigeria CBN Mr. Godwin Emefiele ,says that the Monetary Policy Committee members has again retained the Monetary Policy Rate MPR at 11.5 per cent, retained the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 27.5 per cent and retain the Liquidity Ratio at 30 per cent.
He explained that the MPC made the decision to hold all policy parameters constant; adding that the development will enable the continued permeation of current policy measures in supporting the recorded growth recovery and macro-economic stability.
Emefiele,according to the communique issued at the end of the meeting of the committee, said that the economy has been gradually reopening following the effect of the global pandemic noted that it was far from over and therefore continued to hinder the recovery.
He implored the Presidential Task Force on COVID-19 to intensify efforts towards procurement of more vaccines to ensure that herd immunity is achieved in Nigeria.
He added that the MPC was concerned about the broad level of insecurity across the country, noting its impact on business confidence and overall economic activities.
According to him,the persisting insecurity in key commodity producing areas and urged the Federal Government to intensify security surveillance in farming communities to ensure uninterrupted farming activities.
He said that the committee members expressed optimism about the likely moderating impact of the forthcoming harvests on food prices, as this would contribute to the ongoing broad reduction in headline inflation.
He also said said that the apex will continue to release maize from its strategic maize reserve directly to feed-millers as part of its strategic response to address rising food prices and moderate the price of maize across the country.
He added that the members highlighted the contribution of poor infrastructure to rising domestic price levels, tasking the Federal Government to prioritize investment in public infrastructure such as improved transportation networks, power supply and telecommunication facilities.
He explained that the complementary role these bonds would play to boost foreign exchange supply, improving accretion to reserves and easing the exchange rate pressure.
MPC, therefore, encourage the Bank to continue using its existing administrative methods to rein-in inflation by the use of its discretionary CRR policy to mop-up liquidity from the banking system as the need arises.
He also said that the Committee was of the opinion that there was a need to continue to put in place policy measures that will further and faster drive down inflation, while at the same time accelerate output growth to levels above population growth rate.
The committee also encouraged the Bank to continue the use of its intervention mechanism to deploy funds to output-stimulating and employment-generating sectors of the economy, such as, the Targeted Credit Facility, AGSMEIS, Agriculture and Manufacturing.
According to him, “The Committee noted the gradual recovery in output growth following positive growth in the first quarter and improving PMI in subsequent months, expressing confidence that the second quarter output result will show further improvement.”
“It commended the continued effort by both the monetary and fiscal authorities as well as public health agencies in stemming the Pandemic and its impact, thus, returning the economy to a path of recovery.”
He said that the Committee encourages Nigerian banks to extend more credit to consumers and firms to enhance consumption and production activities necessary to strengthen the recovery.
The committee members noted the persistent reduction in remittance of oil revenue to the Consolidated Revenue Fund, stemming largely from rising levels of cost under-recovery and other obligations, particularly to Joint Venture Contracts.The Committee thus, urged the Government to continue to explore additional sources of non-oil revenue, as this would reduce the over dependence on a single revenue source.”
“Members applauded the efforts by the Federal Government to encourage the use of gas in motor vehicles and the payment for conversion of 1 million Premium Motor Spirit (PMS)-driven vehicles to gas-driven, to reduce overall cost of PMS consumption.The committee encouraged the participation of private sector initiatives to develop and expand modular refineries while it frowned at cross-border smuggling of PMS.”