Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 4)

The Monetary Policy Committee of the Central Bank of Nigeria (CBN) retained the Monetary Poli-cy Rate (MPR) at 11.5 percent, as well as all other monetary parameters, at the first meeting of the Central Bank of Nigeria (CBN) for 2022, held on the 24th and 25th of January. Specifically, the Cash Reserve Ratio (CRR) was retained at 27.5 percent, the Liquidity Ratio was retained at 30 percent, and the asymmetric corridor of +100/-700 basis points around the MPR was also retained. The de-cision to retain all the parameters was aimed at supporting the existing economic growth recovery and curbing the increase in prices. However, inflation persistence in the country has continued to emanate from supply-side constraints which monetary policy may be unable to mitigate. It there-fore becomes necessary for the government to leverage fiscal policy in order to improve the ease of doing business and boost aggregate supply. Unconventional monetary policies should also be scaled up to enhance productivity in both the agricultural and manufacturing sectors. This in turn would ease the pressure on the exchange rate, which would further dampen price levels.

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