Nigeria’s MPC keeps rates steady at 14% as CBN sees external reserves trending over $34bn

In line with some analysts’ expectations, the Monetary Policy Committee of the Central Bank of Nigeria (CBN) Tuesday left the benchmark interest rate, the monetary policy rate (MPR) and other key monetary indicators unchanged.

The monetary regulator rising from its 259th policy meeting retained MPR at 14 percent, ditto cash reserves ratio at 22.5 per cent, liquidity ratio at 30 percent, and the asymmetric window at +200 and -500 basis points around the MPR.

Godwin Emefiele, the CBN governor, who announced the decision of the committee at the end of a two-day meeting, said it was to early for a cut due to the inflation rate being above target.

He disclosed that the $3 billion Eurobond introduced to the international capital market last week has been oversubscribed by $11 billion. A development, he said, was an indication of international investors’ confidence in the Nigerian economy.

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He equally indicated that the nation’s external reserves have risen over $34 billion.

Analysts at Meristem Securities, in a report released last week, indeed predicted holding of rates.

“We note that the committee is likely to focus on consolidating on the gains attained so far as a result of policy decisions implemented in the year. Consequently, we expect the MPC to make the following decisions: Retain the MPR at its current level of 14.00%, retain liquidity ratio at 30%, retain the asymmetric corridor at +200bps/-500bps and retain the CRR at 22.5%,” they noted.

However, for researchers at FSDH, the short-term outlook of the Nigerian economy favours a monetary policy easing. They believe that the MPC may either reduce the Monetary Policy Rate (MPR) by a few basis points or adjust the rates around the asymmetric corridor of the rate.