The Central Bank of Nigeria (CBN) has maintained official interbank interest rate at 14 per cent, arguing  that recent economic indicators support variables behind the decision. This is the 5^th time in nine months that the interest rate would be maintained at 14% in addition to other parameters which remained unchanged.

At the end of the Monetary Policy Committee (MPC) of the bank, it also retained the CRR at 22.5 per cent and Liquidity Ratio at 30.00 per cent. The committee also retained the Asymmetric corridor at +200 and -500 basis points around the MPR. The bank may have been encouraged by recent bullish manifestations in the economy with the naira beginning to firm up against the dollar.

‘‘The committee in consideration of the headwinds in the domestic economy and the uncertainties in the global environment, decided by 9 out of 10 members to retain the MPR at 14.0 per cent alongside all other policy parameters,’’ the CBN governor, Mr. Godwin Emefiele said Tuesday while addressing reporters at the end of the meeting in Abuja.

Only one member voted to reduce the MPR, he emphasised.

The MPC pointed to the fact that headline inflation (year-on-year), declined for the first time in 15 months, dropping by 0.94 percentage point to 17.78 per cent in February, from  the  18.72 per cent recorded in January 2017, and 18.55 per cent in December, 2016 seemingly reversing the monthly upward momentum recorded since January, 2016 within the same period the bank retained the MPR at 14 per cent. All of this influenced the decision.

Meantime, the economy seems to be on its way to recovery as inflation rate dropped in February falling to 17.78 percent. It is the lowest level in 15 months and driven by a slower rise in general price levels, the National Bureau of Statistics said.

The Nigerian National Assembly has also promised to pass the 2017 budget by the end of March. Inflation had risen to 18.72 percent in January, its 12th monthly rise and its highest level in more than 11 years, as Nigeria grapples with an economic recession, a currency crisis and dollar shortages, brought on by low oil prices, which is the mainstay of the economy.

The central bank, under pressure to narrow the gap between the official and black market rates, has devalued the naira for consumers, offering to sell them dollars at about half the premium the black-market charges. It has also increased dollar sales in recent weeks to importers to try to boost the naira. Nigeria has limited manufacturing capacity and depends on imports for local consumption.

A separate food index showed inflation at 18.53 percent from 17.82 percent in January, the statistics office said in a report, pushed up by the rise in food staples such as bread, cereal and meat, while drink prices slowed. Last week the government unveiled sweeping economic recovery plans, including measures to reduce its dependence on oil and to relax foreign exchange restrictions, in a drive to pull the country out of its first recession in 25 years.

NBS forecasts inflation to be at 15.74 percent at year-end and 12.42 percent in 2018, which if achieved, could alleviate widespread frustration with living costs, analysts say.

Meanwhile the National Assembly aims to pass the 2017 budget by the end of March, the president of the Senate has said. “This month is our deadline to finish work on the budget and return it to the executive,” Senate President Bukola Saraki said after a meeting with President Muhammadu Buhari and the head of parliament’s lower chamber. Buhari presented his record 7.298 trillion naira ($23.21 billion) budget to lawmakers in December.

The budget must be agreed by lawmakers before being passed back to the president and passed into law. Heads of ministries and agencies of government have already appeared at the National Assembly to defend their budget.