After its meeting Tuesday, the Monetary Policy Committee of the Central Bank of Nigeria (CBN) announced it would retain the Monetary Policy Rate at the current rate of 14 per cent. This is a heart-breaker for manufacturers who had hoped for a reduction in the lending rate considered to be very high and inimical to growth in the primary sector.
Most analysts prior to the meeting have rooted for a reduction as a way of boosting lending to manufacturers who had been operating under the severe strain of high lending rate. Ahead of the meeting, the Minister of Finance, Mrs Kemi Adeosun said it was the desire of the Executive that MPC cut back on the lending rate.
The decision of the CBN in a sense stamps the authority of its independence from the Executive.
A reduction in MPR would have made more money available for borrowing by manufacturers especially which would directly boost production, create for jobs and trigger a stimulation of the economy.
Nigeria has been variously described as a difficult place to do business and high interest rate is one of the reasons adduced for such tag.
The other side of the coin, according to some analysts would be that the MPC by retaining the MPR was aiming to ensure stability in prices. This much was also echoed by CBN Governor, Godwin Emefiele, while addressing journalists after the meeting.
The Cash Reserve Ratio and the Liquidity Ratio also remain unchanged at 22.5 per cent and 30 per cent respectively, an indication that the MPC was more concerned with price stability than anything else
