BusinessHighlight

Easing Will Pull Real Interest Rate Into Negative Territory- Emefiele

330

…Retains Monetary Policy, Other Policy Parameters.

By Gift Olivia Samuel, Per Second News
The Governor of the Central Bank of Nigeria(CBN),Mr Godwin Emefiele has said that easing the interest rate at this time will pull the real interest rate further to a negative territory which is a disincentive to investment.

Emefiele who made this known on Tuesday while briefing newsmen on the outcome of the 257th Monetary policy Committee (MPC) meeting in Abuja, stressed that with the drop in inflation rate from 18.8 per cent to 16.1 percent, there is hope that interest rate will be reduced soon but Nigeria is not yet ready to tow that path.

While noting that whatever actions taken to stimulate growth when inflation has risen above the 12 percent range will end up retarding growth, he expressed optimism that the reverse in inflation will continue to trend downwards.

According to him; “There are acceptable modules for computing the inflation threshold and these modules have computed the inflation threshold for Nigeria at a range of between 10 to12 percent meaning that when inflation rises above 12 percent, whatever action that is taken to stimulate growth will end up retarding growth.

“We understand that there is need for a low interest rate, but a disincentive to investment will hurt our stability that we have so far achieved in the foreign exchange market and there is a need for us to ensure that these does not happen. That is the rationale behind holding interest rate. We understand the pain but then I assure you that the actions of the MPC will be reflected in whatever direction that we think is good for Nigeria and for Nigerians”.

He reiterated that the Committee expressed satisfaction with the gradual but consistent decline in inflationary pressures in the domestic economy, noting its substantial base effect, continuous improvements in the naira exchange rate across all segments of the foreign exchange market, and considerable signs of improved investments inflows.

Emefiele noted however that the MPC expressed concern over the increasing fiscal deficit estimated at N2.51 trillion in the first half of 2017 and the crowding out effect of high government borrowing.

He also clarified that while urging fiscal restraint to check the growing deficit, the Committee welcomed the proposal by government to issue sovereign-backed promissory notes of about N3.4 trillion for the settlement of accumulated local debt and contractors arrears

He further said that; “The Committee welcomed the move by the fiscal authorities to engage the services of asset-tracing experts to investigate the tax payment status of 150 firms and individuals in an effort to close some of the loopholes in tax collection, towards improving government revenue. However, the Committee expressed concern about the slow implementation of the 2017 Budget and called on the relevant authorities to ensure timely implementation, especially, of the capital portion in order to realize the objectives of the Economic Recovery and Growth Plan”.

The Apex Bank Head added that in consideration of the headwinds confronting the domestic economy and the uncertainties in the global environment, the Committee decided by a vote of 6 to 2 to retain the Monetary Policy Rate (MPR) at 14.0 per cent alongside all other policy parameters.

He said that consequently, 6 members voted to retain the MPR and all other parameters at their current levels while two members voted to ease the stance of monetary policy, leaving the MPR at 14 per cent; the CRR at 22.5 per cent; the Liquidity Ratio at 30.00 per cent; and the Asymmetric corridor at +200 and -500 basis points around the MPR.

Leave a comment

Related Articles

FG set to partner private sector to raise $10bln for power sector

The Federal Government has unveiled an ambitious plan to collaborate with the...

Nigeria Customs Service Exceeds 2024 Revenue Target, Rakes in N5.7trn

The Nigeria Customs Service (NCS) has announced a remarkable revenue generation of...

Nigeria’s Domestic Debt Reaches N66.957trn in H1 2024

Nigeria’s domestic debt stock has surged to N66.957 trillion in the first...

Alleged bullying: FG suspends 13 FGC Enugu students as governor orders arrest

The Federal Government has taken swift action against bullying in Federal Government...

Edo Gov. Okpebholo appoints Oshimhole’s son commissioner, SSG, AG, others

The new governor of Edo State, Sen. Monday Okpebholo, has announced Mr....

Rodri Brushes Off Vinicius, Real Madrid at Ballon d’Or ceremony

Recently crowned 2024 Ballon d’Or winner Rodri has downplayed the absence of...

Super Eagles Land in Abidjan, Gear Up for Benin Republic Clash

The Nigerian national football team, the Super Eagles, has arrived in Abidjan,...

Nigeria signs $1.2bln deal with CNCEC to revive aluminium smelter

Nigeria has taken a significant step towards reviving its dormant aluminium smelter...

VP Shettima Arrives in Benin City for Edo Governor’s Inauguration

Vice President Kashim Shettima has arrived in Benin City, Edo State capital,...

Breaking: Powerful explosion rocks Jos, many people feared dead

A devastating explosion shook the city of Jos on Tuesday morning, sending...

NNPC Ltd. boss, Mele Kyari, thrashes allegation of sabotaging Dangote Refinery as baseless

Mr. Mele Kyari, the Group Chief Executive Officer of the Nigerian National...

Infanticide: US places $25,000 bounty on fleeing Nigerian parent

The United States of America has offered a $25,000 reward for anyone...

Tinubu, Abiodun, Sanwo-Olu, others extol Pastor Tunde Bakare at 70

Pastor Tunde Bakare, the founder of Citadel Global Community Church, is a...

NNPC Ltd. Unveils Plan to Resolve Nigeria’s Energy Trilemma

Nigerian National Petroleum Company Limited (NNPC Ltd) Group CEO, Mr. Mele Kyari,...

Breaking: IPMAN Secures Direct Supply Deal with Dangote Refinery, Promises Steady, Affordable Fuel Nationwide

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has announced a landmark...

“Operation Sweep”, FCT demolition squad, faces backlash from residents, Wike reacts

The recent demolition exercise by “Operation Sweep”, a task force set up...

Nov. 16 Ondo guber poll: Sensitive election materials arrive

Ahead of the Saturday, October 16 governorship poll in Ondo State, sensitive...

China’s imports from Nigeria soar to $15.1bln, 36.1% increase

China’s imports from Nigeria have reached an all-time high of $15.1 billion...

Vandals destroy TCN towers, disrupt power supply in Abuja

The Transmission Company of Nigeria (TCN) has reported a fresh attack on...

Amid opposition, Kano Rep. Jibrin promises to push Tinubu’s tax reform bills through in NASS

In spite of growing opposition to President Bola Tinubu’s controversial tax reform...