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The Central Bank of Nigeria has announced that its Monetary Policy Committee (MPC), which ended its latest two-day meeting today, unanimously voted to leave the anchor interest rate – Monetary Policy Rate (MPR) – unchanged at 14 percent.

The April 2018 meeting was the first of the bi-monthly meetings since November 2017. The previous meetings scheduled for January 2018 and March 2018 could not hold as the MPC was unable to form quorum.

According to Exotix, the global investment banking, research and analytics firm, the decision to leave rates unchanged was “clearly driven by the high and persistent inflation, which has plagued the country since rates of yoy inflation more than doubled in 2016, following a devaluation of the naira.”

However, the firm noted that year-on-year decline in inflation over consecutive past 13 months is a promising sign.

Apart from retaining the MPR, the MPC also unanimously decided to leave the 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.  

The decision is likely to stoke the debate that has laid dormant in the period the MPC meetings had failed to hold. The debate is on whether the CBN should be stimulating economic growth with monetary easing or maintaining its tightening cycle on concern over inflation.

The GDP grew by 1.92 percent in Q4 2017, and full-year 2017 growth was a meagre 0.83 percent. But, in spite of its 13-month streak of decline, inflation rate was 14.33 percent in February 2018, more than 400 basis points above the single-digit target by the CBN.

“This low level of growth might typically be a reason for a cut in rates, but it is clear that, in the eyes of the MPC, inflation concerns outweigh growth disappointments,” according to Exotix.