CBN retains MPR, CRR rates

The Central Bank of Nigeria (CBN) yesterday announced the retention of the Monetary Policy Rate (MPR)benchmark interest rate at 12 percent.

The CBN Governor, Godwin Emefiele, who presided over his first Monetary Policy Committee (MPC) meeting after assumption of office in June, said retaining liquidity ratio at 30 percent and public and private sector Cash Reserve Requirement (CRR) at 75.0 percent and 15 percent, respectively, was occasioned by concerns that inflationary pressure, which was marginally subdued since last year, had re-emerged since February.

All measures of inflation have witnessed progressive upward trend since February 2014, a situation the CBN said it would monitor closely to reverse.

Year-on-year headline inflation steadily inched up marginally from 7.9 percent in April to 8.0 percent in May 2014, and further to 8.2 percent in June on upward food inflation which rose from 9.7 percent in May to 9.8 percent in June, while core inflation, on the other hand, rose from 7.7 percent in May to 8.1 percent in June.

'Other pressure points include the underlying pressure from food/core inflation and the risks that could emanate from the likely increase in aggregate spending in the run-up to the 2015 general elections,' Emefiele stated in his briefing on the outcome of the two-day MPC meeting in Abuja.

While the inflationary pressure remained a concern, the governor was hopeful that other reform measures could dampen food prices in the short to medium term and restore inflation to a sustainable long-run path.