The Monetary Policy Committee of the Central Bank of Nigeria on says the country will exit recession by the end of the third quarter of 2017.
This was the position of the committee, in a communique that was read by the CBN Governor, Mr. Godwin Emefiele, after its two-day meeting in Abuja.
The committee said timely implementation of the recently launched Economic Recovery and Growth Plan would take the country out of recession.
He bank also stressed that judicious execution of the 2017 budget, which was recently passed by the National Assembly.
“The Committee urged the fiscal authorities to expeditiously commence the implementation of the recently approved 2017 budget, especially, the capital expenditure portion, in order to sustain the momentum of recovery, engender employment and restore confidence in the Nigerian economy”.
However, it said there were downside risks that might limit the potential for growth.
The MPC believes that the inflation outlook does not pose significant threat as the limit of the base effect driving the current moderation in prices may have been reached.
“It, however, noted the associated risks to banking system liquidity of the envisaged fiscal injections during the remainder of the year.” Emefiele said
He explained that the committee in consideration of the challenges weighing down the domestic economy and the uncertainties in the global environment, decided by a unanimous vote of the eight members in attendance to retain the Monetary Policy Rate at 14 per cent.
Apart from the MPR, he said the committee also voted to retain the Cash Reserves Ratio at 22.5 per cent.
Also retained were the Liquidity Ratio, which was left at 30 per cent; and the Asymmetric Window, which was left at +200 and -500 basis points around the MPR.
“Further tightening would widen the income gap, depress aggregate consumption and adversely affect credit to the real sector of the economy.”
”The MPC was however, concerned that loosening would exacerbate inflationary pressures and worsen the gains so far achieved in the exchange rate of the naira. It was also convinced that loosening would further increase the negative real interest rate as the gap between the nominal interest rate and inflation widens”. He explained
The apex bank governor, reiterated the bank’s commitment to further support the foreign exchange market but would not determine convergence rate for the Naira.