Nigeria’s Monetary Policy Committee has left key interest rates unchanged at 14%. The cash reserve requirement and liquidity ratio were also retained at 22.5% and 30% respectively.
Lara Afolayan reports that the monetary policy committee sees the downward inflationary trend as positive but still above the policy reference band.
It is pleased with existing naira stability across all segments of the foreign exchange market and prospects of foreign exchange inflows.
But it feels loosening its current stance will worsen inflationary pressure and reverse the naira’s gains.
Tightening on the other hand could widen the income gap, depress aggregate consumption and affect real sector credits.
Economic watchers have criticized this monetary policy stance saying it does not compliment recently unveiled economic reforms by the fiscal authorities.
They feel a reduction in key rates will help enhance credits to the real sector at this time.
But the committee says its actions are in line with prevailing economic conditions.
The apex bank maintains that the country will exit recession by the third quarter of this year.
It advises that the budget be urgently assented to and implemented for the success of the economic recovery and growth plan.
It also advises deposit money banks to improve on credit flows to the private sector.