The CBN governor said Nigeria did not benefit from those
funds which were released into advanced economies during the period of the
COVID-19 pandemic in which some found their way into emerging markets.
Ordinarily, such policy normalisation should be of great
concern to the Nigerian economy as it would have led to huge foreign exchange
(forex) outflows with dire consequence on the economy.
But, Emefiele, while reacting to the development after the
two-day meeting of the Monetary Policy Committee (MPC), the first in 2022,
further allayed concerns that the monetary authority might possibly react by
raising interest rates as well.
This came as the apex bank after its meeting, resolved to
leave all monetary policy parameters unchanged in a bid to support the recovery
and growth of the economy.
The CBN left the Monetary Policy Rate (MPR), otherwise known
as the interest rate unchanged at 11.5 per cent with the asymmetric corridor of
+100/-700 basis points around the MPR.
The MPR is the rate at which the CBN lends to commercial
banks and often determines the cost of borrowing in the economy.
The MPC also voted to maintain the Cash Reserve Ratio (CRR)
at 27.5 per cent as well as the Liquidity Ratio at 30 per cent.
Emefiele, who read the committee’s communiqué, further
disclosed that the banking industry Non-Performing Loans (NPLs) had reduced to
about 4.85 per cent in December, the lowest in about 10 years.
Also, the CBN governor said Nigerian have no business
patronising money lenders otherwise known as loan sharks, adding that the CBN
had put in place measures aimed at ensuring that people easily accessed loans
from commercial banks without having to influence anybody.
He was reacting to the alleged excesses on the part of loan
sharks in recent times.
In November 2021, the Federal Competition and Consumer
Protection Commission (FCCPC) had announced that it was partnering the CBN, and
other anti-graft agencies to address multiple potentially dubious conducts of
certain money lenders who charge extremely high rates of interest, typically
under illegal conditions.
Emefiele, however, vowed to deal ruthlessly with the money
lenders if caught, stressing that most operated within rural communities.
Nonetheless, the MPC had noted with concern, the slight
increase in headline inflation (year-on-year) to 15.63 per cent in December
2021, from 15.40 per cent in November, following seven consecutive months of
decline.
He pointed out that the unexpected increase was attributed
to both the food and core components, which rose to 17.37 and 13.87 per cent in
December 2021 from 17.21 and 13.85 per cent in November, respectively.
The committee, however, expressed confidence in the CBN’s
sustained intervention programmes, noting that inflation would continue to
abate as food supply improves as the seasonal drive in price development
associated with the December festive period was largely contributory to the
marginal increase in price levels, and as such, believed that the episode of
increase may be temporary.
The committee accessed the balance of risks confronting the
domestic economy in the near term as they impact output growth and price
stability and noted the unrelenting effort by the monetary and fiscal
authorities in mitigating the impact of the virus on the economy.
It observed the continued moderate recovery of the domestic
economy but requires further concerted policy effort by both the monetary and
fiscal authorities to improve the momentum and strengthen the recovery.
On the pandemic, the MPC reviewed its continued impact on
the domestic economy as members collectively agreed that the downside risks
were still hindering the recovery. In this light, it commended the efforts of
the Presidential Task Force on COVID-19 for procuring vaccines and continuing
the drive to ensure that most Nigerians are fully vaccinated.
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