By Emma Ujah, Abuja Bureau Chief
ABUJA—The Governor of Central bank of Nigeria, CBN, Mr. Godwin Emefiele, said, yesterday, that the apex bank was closely monitoring government spending and those of individuals as the nation moves nearer the 2015 elections with a view to taking proactive measures towards checking their negative effects on the economy.
He was reacting to questions at his briefing on the outcome of the 96th Monetary Policy Committee, MPC, meeting which held between Monday and yesterday, in Abuja, where he also announced the retention of the Monetary Policy Rate, MPR, at 12% , with a corridor of +/-200 basis points.
He said: “We are monitoring the situation and the prevailing situation in the market; monitoring the spending of government and individuals as we go into election season.”
The governor renewed his earlier commitment to drive down interest rates in the country, using monetary policies and said that the economy was already moving towards that direction.
According to him, “we can see that the micro-economy is beginning to move into the direction that we expect and we are going to see the reversal of interest rate in the near future.
“We are optimistic of the mandate of bringing down the interest rate. We will do everything doable to ensure that this is achieved. We will do that within the ambit of the parameters involved and ensure that we do not create another problem for the people.
“We are working on the issue of interest rate. In my inaugural speech on June 5, I said that we are going to pursue a gradual reduction of interest rate. It is a five-year agenda that we made.”
Mr. Emefiele’s assurances notwithstanding, the inflationary pressures were evident, a situation he admitted but attributed to low agricultural harvest in the North-East and North Central regions, currently facing debilitating security challenges there.
He said: “Developments in the aggregate price level suggest an underlying inflationary pressure since January 2014.
“The year-on-year headline inflation steadily inched up marginally from 7.9 percent in April to 8.0 percent in May 2014 and further to 8.2 percent in June.
“The up tick in June was, however, largely attributed to the rise in food inflation which rose from 9.7 percent in May 2014 to 9.8 percent in June, while core inflation, on the other hand, rose from 7.7 percent in May 2014 to 8.1 percent in June.
“The Committee further expressed concern about the liquidity level and the trending uptick in inflation which may not be unconnected with the poor harvest in some agricultural areas, particularly in the north-eastern and central states of the country.”
The CBN boss revealed that foreign reserves had risen to $40.2 billion and urged that reserves accretion needed to improve much faster to provide a strong and more resilient buffer to fiscal operations.
He said: “Gross official reserves rose to US$40.20 billion by July 18 from US$37.31 billion at end June 2014. The increase in reserves was mainly due to increased accretion and moderation in the rate of depletion.”
Emefiele noted that inadequate gas supply to electricity generating plants remained an impediment to the realisation of the full benefits of the recent privatisation of the power sector.
He, therefore, urged collaborative efforts by both the government and private sector players in the industry and good spirited Nigerians towards ensuring that Nigerians reaped the benefit of the exercise.
The apex bank retained the Liquidity Ratio at 30 percent. It also retained the public and private sectors’ cash reserve requirement at 75.0 percent 15.0 percent, respectively.