The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday called for a quick passage of the 2017 budget by the authorities concerned and the need to pursue non-oil driven economy. The CBN Governor, Mr. Godwin Emefiele, who stated these while briefing journalists at the end of a two-day meeting held at the apex bank’s headquarters in Abuja, said they would go a long way in stimulating aggregate demand and restoring confidence in the economy

Emefiele said the committee was of the view that given the thrust of the 2017 budget and the accompanying sectoral policies, output growth should resume in the short to medium-term.He also said that all the 10 members of the MPC, who attended the meeting, agreed to maintain the current monetary policy stance. This means that the committee left the Monetary Policy Rate unchanged at 14 per cent, while the Cash Reserves Ratio was retained at 22.5 per cent.

Other indices retained are the Liquidity Ratio, left at 30 per cent; and the Asymmetric Window, left at +200 and -500 basis points around the MPR. Emefiele said while the apex bank was conscious of the prevailing market sentiments in favour of a rate cut, the committee was of the view that most of its decisions in 2016 were informed by the need to address the delicate balance between price stability and growth.

Noting that the pressures on consumer prices had yet to abate even as the economy continued to be in recession despite the intervention support by the central bank, the governor said the committee was not unaware of the economic challenges facing the country. Specifically, the governor said the MPC was concerned that the current situation was not amenable to simplistic analyses and quick fixes such as had found expression and increased attention at different fora.

He said while the domestic economy was faced with huge import-dependent consumption culture, lack of competitiveness of many sectors and yawning infrastructural gap, the unfavourable external environment had complicated the macroeconomic policy environment. This, he noted, had made the apex bank to, on many occasions, taken extraordinary steps to support other policies as well as compensate for aspects of structural gaps in the economy, even at the expense of its core mandate.

Emefiele stated “The committee noted that inflationary pressures would begin to subside as non-oil output recovers and the naira exchange rate stabilises. Until then, it stressed, a rate cut would worsen the inflationary conditions and undermine the current outlook for stability in the foreign exchange market. “The committee also feels that doing so will further aggravate demand pressures, while undermining existing income levels in the face of the already expansionary monetary policy and increasing inflationary pressure, which will make the economy unattractive for foreign and domestic investment.

“Given these limitations, the committee was reluctant to lower the policy rate on this occasion, but remains committed to doing so when the conditions permit.” In addressing the infrastructure gap in the country, the CBN governor said the committee urged the Federal Government to seriously consider using the Public Private Partnership model in its infrastructure development programme as a means of cushioning any possible shocks to budgeted revenue. He said the total foreign exchange inflows through the CBN increased significantly by 82.45 per cent in December 2016 owing mainly to the increase in crude oil prices.

When asked to respond to claims that the apex bank had about five windows under its foreign exchange policy, Emefiele said such were untrue. He said those making such remarks were doing so for reasons best known to them, adding that there was a need for Nigerians to exercise caution when making comments that could affect the economy. Emefiele stated that the foreign exchange policy of the CBN was well crafted, adding that the decision of the bank to allocate 60 per cent of the available foreign exchange to the manufacturing sector had started yielding results based on the recent manufacturing index released by the National Bureau of Statistics.

He put the value of the external reserves at $28.9bn, adding that the bank would continue to monitor developments in the foreign exchange market in order to check abuses.

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