The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has for the seventh time retained the lending rate at 12 percent owing to the fact that it cannot be reduced with the current inflation rate in the country.
The Governor of the CBN, Mr. Lamido Sanusi, told journalists at the end of the committee meeting on Monday in Abuja that considering the stability achieved in 2012 with average year-on-year headline inflation rate at 12.24 percent, retaining the MPR at 12 percent was the right option.
“The committee considered the call for the reduction in the MPR because of the inflation outlook; however, the outlook may be undermined by increased sub-national government spending and Federal Government expenditure in 2013.
“In view of the foregoing, the committee decided that it was prudent to hold and monitor development between now and next meeting of the MPC.
“The committee therefore decided by a vote of a majority of eight to two to maintain the current policy stance that is to retain MPR at 12 percent with corridor of plus or minus 200 basis point around the midpoint,” Sanusi said.
Sanusi added that the committee retained the Cash Reserved Ratio (CRR) at 12 percent and the Liquidity Ratio at 30 percent.
Speaking on the oil price benchmark put at 79 dollar per barrel for the 2013 budget, Sanusi said that the decision might pose a risk to inflation objectives.
He noted that the oil benchmark for the 2013 budget was increased from 75 dollars to 79 dollars per barrel and that “this may therefore constitute a pressure point for the low inflation objective and effective monetary policy as a whole in 2013’’.
He assured Nigerians that the committee would respond appropriately if public spending in 2013 added to inflationary pressure.
Source African Press Agency
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