…As MPR Remains At 13 Percent, CRR At 31 Percent
Gift Olivia Samuel, Per Second News
Abuja-Governor of the Central Bank of Nigeria, Godwin Emefiele has stated that the average Naira exchange rate at the interbank market was relatively stable at the interbank segment, but significantly volatile in the Bureau De Change segment.
This is just as he said that the Exchange rate opened at N197.00 to $1 and closed at N197.00 to $1, with a daily average of N197.00 to $1 between July 21 and July 23, 2015 as against N244 to $1 obtainable in Bureau de Change.
Governor Emefiele while briefing news men on Friday in Abuja on the outcome of the just concluded Monetary Policy Committee meeting (MPC), said that the Committee decided by a vote of 8 to 4 to retain the Monetary Policy Rate at its current level of 13 per cent and by a unanimous vote to retain the Cash Reserve Ratio CRR at 31 per cent while 4 members voted to remunerate the CRR.
He stated that the Committee which reviewed the global and domestic economic and financial environment in the first half of 2015 as well as the outlook for the rest of the year, observed that global output recovery remained largely sluggish although with strong promise in the United States and the Euro area.
The Governor noted that the oil and gas sector declined by 8.15 per cent, in contrast to the modest growth of 1.2 per cent achieved in the last quarter of 2014, adding that persistent scarcity of fuel products as well as slow improvements in electricity supply could be a drag on output growth in the near term.
Emefile stated that the Committee underscored the need for the intensification of various ongoing initiatives to diversify the economy away from oil, and expand the base for foreign exchange receipts.
He however noted that the weak performance in the emerging and developing economies softening oil prices continued to present improved growth opportunities for the advanced economies and oil importing countries while dampening growth prospects in oil exporting economies.
The CBN boss said that amongst the emerging markets and developing economies, growth is expected to slow considerably but resume moderately in 2016, adding that growth in the developing economies is expected to remain uneven in the short-to-medium-term, largely reflecting their weak demand, lower commodity prices and tight financial conditions.
He added that global inflation is expected to remain moderate at 3.5 per cent in 2015 but projected to accelerate to 3.7 per cent in 2016, due to rising downside risks, particularly in the Euro area, as well as the tailwinds arising from the sharp drop in oil prices, excess capacity in the advanced economies and the appreciation of the US dollar.
He said “According to the National Bureau of Statistics (NBS), growth in real GDP declined to 3.94 per cent in the first quarter of 2015, from 5.94 and 6.21 per cent in the preceding quarter and corresponding period of 2014, respectively. Real GDP growth is projected at 5.54 per cent for fiscal 2015, reflecting a 68 basis point decrease compared with the 6.22 per cent in 2014.
“At 5.59 percent, the non-oil sector continued to be the main driver of output growth in the first quarter of 2015, at 5.59 per cent with the leading growth sectors being construction, services, agriculture and trade which grew by 11.17, 6.85, 4.70 and 4.47 per cent, respectively”.
On the issue of inflation, he further noted that “the Committee was concerned about the gradual but steady increase in headline inflation up to June 2015, and noted that this reflected a rise in both the core and food components of inflation. Core inflation rose to 8.4 per cent in June from 8.3 per cent in May, and food inflation increased to 10.0 per cent from 9.8 per cent, over the same period”.
Emefiele pointed out that the committee reiterated its commitment to price stability, as it observed that monetary policy would remain tight because of the high liquidity in the system, adding that it urged for coordination of monetary, fiscal and structural policies to stimulate output growth, and stabilize the exchange rate.
According to him, the All-Share Index (ASI)declined slightly by 1.66 per cent from 31,744.82 on March 31, 2015 to 31,216.72 on July 23, 2015, as the Market Capitalization (MC) decreased by 0.37 per cent from N10.72 trillion to N10.68 trillion during the same period.
He further said that the Gross official reserves increased from US$28.57 billion at end-May 2015 to $31.53 billion as at July 22, 2015, reflecting the blockage of leakages as well as the bank’s management policies.
He added that “The Committee acknowledged the absence of easy choices in the
Circumstance but monetary policy alone are limited, and would require urgent complementary fiscal policies to define the path of growth and create the basis for stabilization. On the external front, the adverse effect of the protracted decline in global crude oil prices on the fiscal position of government is becoming increasingly obvious.
“The Committee however noted that financial system stability considerations placed key limitations on the extent of considering price flexibility, creating a compelling need to balance measures to address the current vulnerabilities.
“On inflation, the Committee stressed that some of the drivers of the current pressure on consumer prices were transient and outside the direct influence of monetary policy. Pressure on food prices is expected to gradually wane as the planting season gives way to harvests in the months ahead. Early resolution of fuel scarcity would dampen transportation costs and improve food distribution across the country while improvements in electricity supply could steady output at lower costs.
“The Committee also underscored the imperative of growing and protecting the country’s foreign reserves and building fiscal buffers in the process of strengthening confidence in the economy which is essential for promoting growth and stability”.
Governor Emefiele added that in overall, the Committee expressed optimism that business confidence would continue to improve as Government continues to unfold its economic plans.
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