Nigeria’s central bank kept its benchmark interest rate at 14 percent on Tuesday and dropped the hint that Nigeria will exit recession by the end of the third quarter. CBN governor, Godwin Emefiele said on Tuesday, hours after the statistics office said Africa’s biggest economy contracted in the first quarter. Governor Godwin Emefiele said the bank’s Monetary Policy Committee (MPC) had voted to retain the headline rate.
“In consideration of the challenges weighing down the domestic economy and the uncertainties in the global environment, the committee decided by a unanimous vote of eight members in attendance to retain the MPR [Monetary Policy Rate] at 14 percent,” he said.
The statistics office on Tuesday published data showing that Africa’s biggest economy, in its second year of a recession caused by low oil prices, contracted in the first quarter by 0.52 percent. The central bank’s decision to hold the main interest rate was predicted by economists polled by Reuters last week. The bank also kept its cash reserve ratios for commercial banks at 22.5 percent.
Emefiele also told reporters the bank wanted to end the spread between the black market and official foreign exchange rates, adding that the recent rise of the naira versus the dollar showed that the central bank’s policies were working. “We would prefer a convergence that will go southward rather than northward, but the fact that we have seen the convergence (going) southward gives us a lot of hope that things are working in the right direction,” he added, refusing to give an exchange rate target.
Slow economic recovery
Meanwhile as Nigeria sees “slow movement” towards economic recovery, a spokesman for the presidency said on Tuesday. He was referring to data showing that Africa’s biggest economy shrank by 0.52 percent in the first quarter year-on-year, having contracted 0.67 percent in the same quarter of 2016.