The Central Bank of Nigeria, CBN, on Tuesday opted to retain all fiscal policy instruments, despite the report by the National Bureau of Statistics, NBS, on Monday that the country’s economy sunk deeper into recession.
The Monetary Policy Rate, MPR, which sets the lending rate for banks and businesses for a period, was left at 14 per cent, while the Cash Reserve Ratio, CRR, was retained at 22.5 per cent.
The CRR sets the specified minimum fraction of customers’ total deposits commercial banks could hold as reserves either in cash or deposits with the CBN.
The Central Bank governor, Godwin Emefiele, said at the end of the two-day Monetary Policy Committee, MPC, meeting in Abuja that the liquidity ratio was left by the MPC at 30 per cent, with the symmetric window kept at +200 and -500 basis points around the MPR.
The NBS in its gross domestic product (GDP) report for the third quarter said the country’s recession deepened, with the economy contracting further by 2.24 percent year-on-year basis, from 2.06 slump in the second quarter.
Last week, the NBS said that inflation for October 2016 rose by 18.3 per cent (year-on-year) from 17.9 per cent recorded in September.
The CBN appears to be fighting on several fronts at the same time, with dollar scarcity as a result of the currency restriction policies of the bank driving the exchange rate of the Naira to soar against other international currencies like the dollar.