… Says FG, states still fail to save for rainy days

… Drop in reserves due to capital outflow

…Encourages large firms to issue commercial papers

Rising from its 262nd meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) yesterday in Abuja, voted in the majority to hold key rates constant, signifying continuation of the tightening measures in the monetary circle.

The committee retained Monetary Policy Rate (MPR) at 14.0 per cent Cash Reserve Ratio (CRR) at 22.5 per cent; Liquidity Ratio at 30.0 per cent; and Asymmetric corridor at +200 and -500 basis points around the MPR.

Amidst anticipated huge elections spending, 2018 budgetary expenditure and the inability of the federal government/the states to save some of the oil revenue funds for the impeding hard times, the Central Bank of Nigeria (CBN) has maintained a firm grip on the interest rate regime to consolidate the gains being recorded on inflation.

For the 11th time, the CBN held the benchmark interest rate at 14 percent despite strong positions from some economic watchers for it to be relaxed so the banks can lend more to the economy.

However the MPC said it considered the option of tightening, believing that tightening would curtail the threat of

a rise in inflation, even as the injection from the fiscal authorities would still provide the

economy with substantial liquidity.

Reading the communiqué, the CBN Governor, Mr. Godwin Emefiele said “Notwithstanding the deceleration in headline inflation, the current double digit inflation rate remains above the Bank’s 6-9 per cent target range. In addition, the Committee was of the view that tightening would help stem the tide of capital flow reversals in the face of sustained monetary policy normalization in the US. This, the Committee believed would rein-in inflationary pressure and moderate inflation rate to single digit, increase real interest rate, build

Investor confidence with attendant positive impact on capital inflows and further stabilize the country’s exchange rate.”

MPC also lamented that in spite previous warning that the three tiers of government should save for the rainy day, which they seem not to heed as they continue to spend almost all of the revenues earned by the federation.

To stimulate lending at reduced interest rates to the key sectors of the economy like agriculture and industries, the MPC announced two initiatives.

“We discussed extensively on what can be done to encourage banks to advance credits to the real sector. Based on the May 2018 MPC meeting, the MPC was concerned that credit advance to the economy was sliding. At this meeting, we find a somewhat improvement but we feel that we must still do what we want to do. Some approaches were considered:” he stated.

“The first approach is where we said in order to achieve the objective of lowering interest rates particularly to those priority sectors like the manufacturing sector, and agric sector, we will encourage large corporates to issue commercial paper notes in the market spelling the details of what they will do with that money. And that in order to encourage the banks, we expect the commercial papers to come to the market at single digits interest rates, and for long tenures - as high as five years or seven moratorium and if the CBN sees these notes in the market, it will complement the banks by lending to that corporate at single digit” he said.

He explained that measure “is not meant to be in competition with the banks but to complement the banks as the money will still go through them anyways. But the important thing is that we will see that single digit rates can go through this means” he said.

“Secondly, if a bank loans money for verifiable new projects and plants expansion not refinancing, for seven years, inclusive of two years moratorium at 9 percent interest rate, the CBN will go into that bank CRR and release cash from our CRR, and release that equivalent to that bank at zero cost which means the bank earns a spread of 9 percent interest. We feel this is normal and it’s something that should be given a chance” he explained further.

“In the past, we have reduced CRR, and released liquidity into the market but it wasn’t channeled into employment generating and high output sectors of the economy. We believe this will work. But some more details will be provided to the banks and the public” he noted.
http://surecontents..com/2018/07/cbn-continues-tightening-measures.html

Make Una kuku kill us.

Ok

We eating our children's future

Can someone pls break this down to an engineer pls

Beyond nairalanders comprehension, stay tuned.

Need an interpreter for this.

Interpretation: The Economy needs expansionary monetary policies to help invite investors and support growth. But the issue with that is, it's going to keep inflation on the rise, So weighing both, inflation is worse off so CBN adopted a Contractionary monetary policy to deal with inflation cus inflation is at double digits, which is not good enough, also this was done because election is coming and there will be large expenses which can push up inflation figures, so it's wise to adopt Contractionary policies while seeking other avenues of credit to bring in investors

enshi:
Can someone pls break this down to an engineer pls

what CBN is saying is that theres too much money circulating within Nigeria and monies going out of the country. So they wana restrict the flow of money .

Watsap me or DM me

Rickyuzzy:
Interpretation: The Economy needs expansionary monetary policies to help invite investors and support growth. But the issue with that is, it's going to keep inflation on the rise, So weighing both, inflation is worse off so CBN adopted a Contractionary monetary policy to deal with inflation cus inflation is at double digits, which is not good enough, also this was done because election is coming and there will be large expenses which can push up inflation figures, so it's wise to adopt Contractionary policies while seeking other avenues of credit to bring in investors

Thank you. Your parent's didn't waste money in training you

Rickyuzzy:
Interpretation: The Economy needs expansionary monetary policies to help invite investors and support growth. But the issue with that is, it's going to keep inflation on the rise, So weighing both, inflation is worse off so CBN adopted a Contractionary monetary policy to deal with inflation cus inflation is at double digits, which is not good enough, also this was done because election is coming and there will be large expenses which can push up inflation figures, so it's wise to adopt Contractionary policies while seeking other avenues of credit to bring in investors

Macro Economist spotted

Rickyuzzy:
Interpretation: The Economy needs expansionary monetary policies to help invite investors and support growth. But the issue with that is, it's going to keep inflation on the rise, So weighing both, inflation is worse off so CBN adopted a Contractionary monetary policy to deal with inflation cus inflation is at double digits, which is not good enough, also this was done because election is coming and there will be large expenses which can push up inflation figures, so it's wise to adopt Contractionary policies while seeking other avenues of credit to bring in investors

lol dont u think ur interpretation needs re-interpretation? At least for the laymen

Rickyuzzy:
Interpretation: The Economy needs expansionary monetary policies to help invite investors and support growth. But the issue with that is, it's going to keep inflation on the rise, So weighing both, inflation is worse off so CBN adopted a Contractionary monetary policy to deal with inflation cus inflation is at double digits, which is not good enough, also this was done because election is coming and there will be large expenses which can push up inflation figures, so it's wise to adopt Contractionary policies while seeking other avenues of credit to bring in investors

You truly attended class unlike the slayers that avoids class like plague but the truth is that the real problem with Nigeria economy is as simple as ABC,they only insert all these grammars to confuse the populace the more.

Nawa oh

Emefiele and his gangs should just resign from that seat and allow we the business men to control the affairs of this nation and see how the economy grows.

I suggest they go to all the markets in Nigeria and pick some Hommies there n we will teach Nigeria how to make money and stimulate the already dead economy.
China I know rely on their populace in terms of stimulating their economy rather than going out their and be looking for who to invest in your economy. Go to border towns and see how Nigeria is loosing billions on daily basis to smugglers,what will happen if they allow those stuffs to be imported and collect their duty n put proper regulations for importing those items.

You killed the purchasing power of your population n expect growth, where will it come from sometimes I wonder what they taught this guyS in class

Nice explaination

If only Nigerians understand 1/10th of what you do, they will appreciate this government more.

Rickyuzzy:
Interpretation: The Economy needs expansionary monetary policies to help invite investors and support growth. But the issue with that is, it's going to keep inflation on the rise, So weighing both, inflation is worse off so CBN adopted a Contractionary monetary policy to deal with inflation cus inflation is at double digits, which is not good enough, also this was done because election is coming and there will be large expenses which can push up inflation figures, so it's wise to adopt Contractionary policies while seeking other avenues of credit to bring in investors

We seriously need to expand and eventually decouple the private sector from the government's financial system. Government remains a dead weight to long term, sustainable economic progress. They are the primary source of inflation, having so much unproductive capital moving around looking for who to waste it. My economic theory remains valid. You simply cannot have inflation in purely private sector economics.

Look at the abandoned aircraft service hangar project in Akwa Ibom on the other thread for example. These are the sources of inflation and capital flight where you spend (especially scarce foreign exchange) without productive returns. If on the other hand the centre was in use, generating revenue, keeping jobs, saving capital flight and reducing the long term demand for foreign exchange in overseas maintainance of aircraft then it certainly will not contribute to inflation but reduce it.

Only the private sector by nature is able to bring such levels of economic efficiency and that is why legislation should be made to decouple the private sector from the government's economic coat-tails by devolving powers and aggressively pursuing privatisation and liberalisation of economic activities.

Rickyuzzy:
Interpretation: The Economy needs expansionary monetary policies to help invite investors and support growth. But the issue with that is, it's going to keep inflation on the rise, So weighing both, inflation is worse off so CBN adopted a Contractionary monetary policy to deal with inflation cus inflation is at double digits, which is not good enough, also this was done because election is coming and there will be large expenses which can push up inflation figures, so it's wise to adopt Contractionary policies while seeking other avenues of credit to bring in investors

madam you try!

but your interpretation also needs interpretion.

make i tell una weting that long story talk.

oga for CBN dey cry say him don do him best to stop inflation but still inflation dey grow evryday sotey edon enter double digit - that is to sa before inflation dey for 0.7 now the thing don enter reach 3.7!

him say if the thing continue to grow as election dey come so, we fit enter recession again and this time the recession go hard to control!


THE RECESSIONIST WANT TO TAKE US TO SEASON TWO OF THE FILM!

WE HAVE SUFFERED FOR BUHARI HAND!

lastempero:
Emefiele and his gangs should just resign from that seat and allow we the business men to control the affairs of this nation and see how the economy grows.

I suggest they go to all the markets in Nigeria and pick some Hommies there n we will teach Nigeria how to make money and stimulate the already dead economy.
China I know rely on their populace in terms of stimulating their economy rather than going out their and be looking for who to invest in your economy. Go to border towns and see how Nigeria is loosing billions on daily basis to smugglers,what will happen if they allow those stuffs to be imported and collect their duty n put proper regulations for importing those items.

You killed the purchasing power of your population n expect growth, where will it come from sometimes I wonder what they taught this guyS in class

This has to be the most ignorant post I read this month!

What do you know about currency management? monetary policy and liquidity squeeze that you want to take the place of the central bank?

Don't you know that economic management is more complex than your simplistic thinking? ?

And China that you called sef is the biggest recipient of foreign direct and portfolio investment in the world.

jomoh:
Nice explaination

If only Nigerians understand 1/10th of what you do, they will appreciate this government more.

what the fuk!


this one doesnt even know what the topic is saying or maybe he is like his bubu and kemi - zero understanding of finances!

Ugosample:


This has to be the most ignorant post I read this month!

What do you know about currency management? monetary policy and liquidity squeeze that you want to take the place of the central bank?

Don't you know that economic management is more complex than your simplistic thinking? ?

And China that you called sef is the biggest recipient of foreign direct and portfolio investment in the world.

Iam sure you belong to Emefiele gang,china economy is driven mostly by its consumer markets and that is what attracted the so called investors in the first place,before now China was a communist state with little foreign investment.Investors only came in to harness the domestic market,so I advice u and your gang that are searching for investors to improve the domestic market first and increase the purchasing power of ur populace and see investors troop in from all angle and

Iam sure with your complex knowledge u cannot run an aboki Kiosk profitably

nwaanambra1:


madam you try!

but your interpretation also needs interpretion.

make i tell una weting that long story talk.

oga for CBN dey cry say him don do him best to stop inflation but still inflation dey grow evryday sotey edon enter double digit - that is to sa before inflation dey for 0.7 now the thing don enter reach 3.7!

him say if the thing continue to grow as election dey come so, we fit enter recession again and this time the recession go hard to control!


THE RECESSIONIST WANT TO TAKE US TO SEASON TWO OF THE FILM!

WE HAVE SUFFERED FOR BUHARI HAND!

My brother they use big grammar they even confuse the economist too.

lastempero:


My brother they use big grammar they even confuse the economist too.

no be small thing my brother!

my father say lies and deception too dey sweet for English language - because with english you fit create plenty escape route from the lies!

bdsm:
what CBN is saying is that theres too much money circulating within Nigeria and monies going out of the country. So they wana restrict the flow of money .

Wow... Don't they have a media auditor. Why the long terminological Epistle..

Thanks though

lastempero:
Emefiele and his gangs should just resign from that seat and allow we the business men to control the affairs of this nation and see how the economy grows.

I suggest they go to all the markets in Nigeria and pick some Hommies there n we will teach Nigeria how to make money and stimulate the already dead economy.
China I know rely on their populace in terms of stimulating their economy rather than going out their and be looking for who to invest in your economy. Go to border towns and see how Nigeria is loosing billions on daily basis to smugglers,what will happen if they allow those stuffs to be imported and collect their duty n put proper regulations for importing those items.

You killed the purchasing power of your population n expect growth, where will it come from sometimes I wonder what they taught this guyS in class

illiteracy is really ur problem here

Ugosample:


This has to be the most ignorant post I read this month!

What do you know about currency management? monetary policy and liquidity squeeze that you want to take the place of the central bank?

Don't you know that economic management is more complex than your simplistic thinking? ?

And China that you called sef is the biggest recipient of foreign direct and portfolio investment in the world.

don't mind him.
NigeriAns And their "I must show myself" mentality

enshi:
Can someone pls break this down to an engineer pls

It means that CBN wants to use contractionary monetary policies to reduce the money in circulation. this policy is used to curb too much money circulation in the economy which is caused by a rise in government spending.

Rickyuzzy:
Interpretation: The Economy needs expansionary monetary policies to help invite investors and support growth. But the issue with that is, it's going to keep inflation on the rise, So weighing both, inflation is worse off so CBN adopted a Contractionary monetary policy to deal with inflation cus inflation is at double digits, which is not good enough, also this was done because election is coming and there will be large expenses which can push up inflation figures, so it's wise to adopt Contractionary policies while seeking other avenues of credit to bring in investors

Exactly and I think the economy is heading to an economic slump again if care is not taken and if this government don't use fiscal policies to curb looming rise in inflation. CBN better be serious with this monetary policy.