The Nigeria Employers’ Consultative Association (NECA) has commended the reduction of the Monetary Policy Rate (MPR) from 13.5 per cent to 12.5 per cent by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN).
Director-general of NECA, Mr. Timothy Olawale, at the weekend, said the development signalled a pro-growth response.
The MPC had on May 28 reduced its benchmark interest rate, the MPR, to 12.5 per cent. The MPC held other key parameters unchanged. Cash Reserve Requirement (CRR) remained at 22.7 per cent, while the liquidity ratio was kept at 30 per cent. Retained the asymmetric corridor around the MPR at +200/-500bps.
CBN governor, Mr. Godwin Emefiele, said the decision of the MPC was necessitated by the need to stimulate growth and recovery of the economy in the face of the impact of COVID-19 challenges.
The apex bank’s governor said the decision was in a bid to stimulate the economy ahead of the projected economic recession arising from the impact of the coronavirus pandemic.
Olawale said such a move could lead to reduction in the cost of credit, increase investment and impact positively on output growth to address the global challenges.
He said, “With the negative effects of COVID-19, the twin challenges of the global oil prices and over-exposure of our economy to external shocks, this decision is a welcomed development by the monetary authority to protect the economy.
“We applaud the current decision of the MPC, which aligned perfectly with the association’s earlier recommendation.”
The NECA boss, however, called for synergy between fiscal and monetary policies in order to grow the economy, which he said was already bleeding.