CBN MPC Retains MPR At 13.5%, Calls on FG To Build Fiscal Buffers


Friday, September 20, 2019 / 4.00PM / Ottoabasi Abasiekong for Proshare WebTV / Header Image Credit:


The Central Bank of Nigeria (CBN) at the end of its rescheduled Monetary Policy Committee (MPC) meeting today announced the unanimous decision by its members to retain the indicative Monetary Policy Rate (MPR) at 13.5%.                                                                                          

The rate freeze applied to other policy indicators such as Cash Reserve Ratio which stayed at 22.5%, the Liquidity Ratio at 30% and Asymmetric Corridor at +200 and -500 basis points. 

The MPC called for urgent steps by the Federal Government to build fiscal buffers through freeing up of national assets, by way of privatization, thereby improving fiscal liquidity. 

Mr. Emefiele also supported the recent proposed increase in Value Added Tax(VAT) from 5% to 7.2%, as this, according to the governor, would improve fiscal revenue and reduce the government's deficit financing.

He also noted that the growth in credit to the private sector in the country remains relatively low at the moment, and needs to be scaled up. 

The MPC also advised the National Assembly to exercise restraint in increasing the crude oil benchmark in the country, considering the uncertainty in the global oil market.

Emefiele highlighted the nexus between high unemployment and high insecurity and called on State Governments to reactivate their respective public works programs that can gainfully employ youths.

The CBN Governor acknowledged the bearish performance of the equities market, while the bond market experienced increased activities reflecting the global preference for fixed income.


Table 1 Key Global Central Bank Monetary Policy Decisions

Central Bank

Revised Interest Rates

U.S Federal Reserve

1.75% to 2% (Reduced)

Bank of England

0.75% (Retained)

European Central Bank

-0.5% (Reduced)

China Central Bank

4.2% (Reduced)

South Africa Central Bank

6.5% (Retained)

Central Bank of Nigeria

13.5% (Retained)

Source: Bloomberg, Reuters, Proshare Economy


Emefiele also called on the management of banks to deepen their lending to the private sector, as recent analysis shows credit to the private sector (9.36%) was 10% of the credit to the government (94.32%).


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