Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), said yesterday that inflation remains above the monetary authority’s target range of six to nine per cent, and that cautious efforts must be made to keep it under control.
This comes after the Monetary Policy Committee (MPC) yesterday kept the benchmark lending rate at 11.5 per cent. The asymmetric corridor was also kept at +100/-700 bps around the MPR, while the cash reserve ratio (CRR) and liquidity ratio (CRL) were kept at 27.50% and 30%, respectively.
Emefiele, the Central Bank Governor and Chairman of the Committee, announced the decisions at the 282nd MPC meeting in Abuja. Tightening rates, according to Emefiele, could dampen the economic recovery, while lowering the benchmark could increase inflationary pressures.
He said that the Committee noted the moderation in headline inflation to 16.63% in September and 15.99% in October, but warned that inflation remained above the tolerance level of 6% to 9%. The MPC recommended that fiscal and monetary authorities continue to intervene to stimulate growth.
According to the CBN chairman, the Committee urged banks to increase lending to businesses to support growth. Emefiele stated that the CBN extended the repayment of intervention facilities to reduce the impact of cash flow on businesses.
“From around September, October 2020, Nigeria began the process of easing the lockdown, and even though we still saw that the Delta variant raised its head around February, March of 2021,” he said. We still believe that these companies should be granted forbearance. At this point, we believe that the global economy has opened up, that the lockdown has been lifted, and that we are aware of the casualties and economic damages caused by the lockdown”.
However, he explained that with the gradual easing of international movements, Nigerian businesses are also returning to their normal lives. “While companies are back to business, revenue has improved, and if revenue improves, then businesses that took loans should be able to pay back,” he added.
Emefiele was also pleased that investors were showing interest in FBN Holdings PLC’s shares. He went on to say that the apex bank would not override the Securities and Exchange Commission’s (SEC) authority on the matter.
He said, “I think we should take SEC’s position because SEC is the regulator of the capital market. We will take their position and they will give guidance on this subject. Of course, as it affects the running and operation of the bank, we will take pre-eminence measures to make sure that the right things are done. Naturally, returns are sent to CBN about individual shareholders and if our position is not in tandem with the position of SEC, we will talk to SEC about it and we will also advise the public”.