MPC retains MPC at 12.5%

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) at its meeting on Monday retained its Monetary Policy Rate (MPC) which measures the interest rate at which the apex bank lends to commercial banks, at 12.5 per cent.
It maintained that tightening the rate at this time could hinder expansion of affordable credit to the rail sector particularly its potential of increasing the costs of production, which would in turn trigger higher costs of goods and services.
Mr Godwin Emefiele, the CBN chief, said 10 members of the MPC voted in favour of the rate retention while two were against the decision, opting for a rate cut instead.
The regulator had in May cut the rate by 100 basis points from 13.5 per cent, the biggest reduction since 2015.
Emefiele said “the committee was mindful of the cut in policy rate at the last MPC meeting and the need to allow time for its effect to permeate the economy.”
He observed that the “positive impact” of the downward review, saying expansion in credit was notable in the economy and that economic fundamentals had gradually improved at the end of June.
The MPC expressed concern about the rise in headline inflation for the 10th consecutive month in June, adding that the gross domestic product might turn in a negative quarterly growth in the second quarter of 2020.
All the MPC members voted to hold the other policy parameter constant including retaining the asymmetric corridor of +200 and -500 around the MPR, the Cash to Reserve Ratio at 27.5 per cent and the liquidity ratio at 30 per cent.