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NIGERIA MONETARY POLICY COMMITTEE - CBN stays put amid heightened uncertainty

CBN stays put amid heightened uncertainty
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) left the monetary policy parameters unchanged at its March meeting. This was expected, as there is very little monetary policy can do to abate the impact of the COVID-19 pandemic and the plunge in oil prices on the economy. The economy has to rely on recently introduced palliative measures to cushion the impact of the dual shocks while health practitioners work to curtail the spread of the pandemic. Consequently, the ten members of the committee in attendance unanimously voted to hold the monetary policy parameters constant i.e. retain the MPR at 13.5%, CRR at 27.5%, Liquidity Ratio at 30% and the Asymmetric corridor around the MPR at +200/-500 basis points.

Price and financial stability under threat
The MPC noted the upward trend in headline inflation, despite the contraction
in broad money for the second consecutive month (-2.29% YTD). The contraction in broad money supply reflected the decline in both net foreign assets and net domestic assets, in spite of the ₦2.35 trillion (Feb’20: +1.34% m/m) increase in net-aggregate credit to the economy. The continued rise in inflation was led by the pressure from food prices, on the back of renewed insurgency in major food-producing areas as well as the continued deficit in critical infrastructure. The committee also highlighted the abysmal performance of the stock market that has been due largely to the global riskoff sentiment occasioned by the spread of COVID-19 and its subduing impact.