Cautious monetary policy stance appropriate due to evolving global developments – Cardoso
Cautious monetary policy stance appropriate due to evolving global developments – Cardoso
The Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, says in view of the evolving global developments, maintaining a cautious monetary policy stance is appropriate.
Cardoso said this on Tuesday in Abuja while presenting a communiqué issued at the end of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).
Voice Media Trust (VMT NEWS) reports that the MPC had retained the benchmark interest rate, and the Monetary Policy Rate (MPR) at 26.5 per cent.
The committee also voted to retain the Standing Facilities Corridor at +50 / -450 basis points around the MPR.
The Cash Reserve Ratio (CRR) was also retained at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-TSA public sector deposits.
According to Cardoso, notwithstanding the global development, available evidence suggests that the Nigerian economy has remained largely resilient to the external shocks.
He said that the resilience reflected the gains from prior reforms implemented by the fiscal and monetary authorities.
“However, maintaining the current monetary policy stance will provide an opportunity to closely monitor incoming data and assess the trajectory of inflation to guide future policy decisions.
“The MPC acknowledged the Federal Government’s renewed commitment to strengthening policy coordination with particular emphasis on the ongoing collaboration with the monetary authority.
“This has helped to moderate the impact of the Middle East crisis on the domestic economy,” he said.
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Cardoso said that greater alignment between fiscal and monetary policies would enhance policy effectiveness and support the achievement of overall macroeconomic objectives.
He said that to further strengthen macroeconomic fundamentals, the committee underscored the potential benefits of Executive Order 9, which mandates that all royalty oil and gas revenues be paid directly into the Federation Account.
He said that members further commended government’s renewed efforts in improving crude oil production and encouraged relevant agencies to strengthen the implementation of reforms to maximise the potential in other sectors.
The CBN governor said that such sectors included solid minerals to complement government earnings.
He said that the MPC also welcomed the positive outcome of the banking sector recapitalisation.
According to him, the committee noted improvement in the resilience of the banking system as reflected in key prudential and financial soundness indicators.
“It, however, urged the CBN to sustain effective surveillance to preserve financial sector soundness and mitigate potential risks to financial stability, price and other domestic developments,” he said.
