Nigeria: Central Bank of Nigeria stays on hold at May's meeting
May 19, 2015
At its 18–19 May monetary policy meeting, the members of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) unanimously voted to maintain the monetary policy rate unchanged at 13.00% with a corridor of +/-200 basis points around the midpoint. The decision was in line with market analysts’ expectations. Moreover, the Bank decided to unify the cash reserve requirement (CRR) for both public and private sector deposits to 31%. The CRR on the private sector was previously 20% and 75% on the public sector.
In its May assessment of the economy, the CBN praised the March general election was carried out successfully; this helped to increase political stability and boosted confidence on the country’s economic outlook. On the downside, the MPC expressed concerns about the difficult situation of the external sector against a backdrop of monetary policy normalization expected in the United States, the low oil price environment and weaker global economic growth. Consequently, the committee stressed the need to strengthen international reserves in an attempt to shore up the naira and maintain the banking system’s stability.
Regarding price developments, the Bank acknowledged that the recent pick-up in inflation mainly reflects transient factors and the pass-through effects of the depreciation of the naira. The next monetary policy meeting is scheduled for 20–21 July.