1. Reduced MPR to 12.50%, down from 13.50%
2. Maintained an asymmetric corridor at +200/–500bps around MPR
3. Retained Cash Reserve Ration (CRR) at 27.5%
4. Retained Liquidity Ratio at 30%
The CBN governor, Godwin Emefiele announced the committee’s decisions today Thursday at the end of the committee’s meeting.
He states:
The apex bank boss said the committee believed that tightening would be “inappropriate” given the economic disruptions caused by the COVID-19 pandemic.“The MPC observed the weakening of the global macroeconomic environment due to the adverse impact of COVID-19 and drop in crude prices which has resulted in negative outputs for most economies,” Emefiele said, reading the committee’s decisions.
“Excess liquidy engendered by loosening may overshoot the economy’s capacity and accelerate inflationary pressures, it nevertheless feels that given the slow rate of acceleration of inflation, the accommodative stance will stimulate aggregate demand and supply in a short term.
“This is because an accommodative stance through a lowering of policy rates will stimulate credit expansion to critically important sectors that will also stimulate employment and revive economic activities for quick growth recovery.
“Policymakers must take action to stimulate growth and recovery. For Nigeria, although first-quarter gross domestic product turned out pleasantly at 1.87% and the race of inflation somewhat moderated, Nigeria may escape a recession if concerted efforts are sustained to stimulate output.”
“Tightening would also increase the cost of credit, reduce investment and impact negatively on output growth. A hold may indicate that the monetary authorities are insensitive to prevailing weak economic conditions. There is, therefore, the need to signal a direction towards immediate recovery.”