{"id":15920,"date":"2017-07-26T11:26:24","date_gmt":"2017-07-26T10:26:24","guid":{"rendered":"https:\/\/nationalwire.com.ng\/?p=15920"},"modified":"2017-07-26T11:26:24","modified_gmt":"2017-07-26T10:26:24","slug":"economic-recovery-can-relapse-warns-cbn","status":"publish","type":"post","link":"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/","title":{"rendered":"Economic recovery can relapse, warns CBN"},"content":{"rendered":"

The Central Bank of Nigeria (CBN) has warned that Nigeria\u2019s fragile growth risks falling back into recession.<\/p>\n

Addressing reporters at the end of the bi-monthly Monetary Policy Committee Meeting in Abuja yesterday, CBN Governor Godwin Emefiele said \u201cforecasts\u00a0of key\u00a0macroeconomic\u00a0indicators\u00a0point to a\u00a0fragile\u00a0economic\u00a0recovery\u00a0in the\u00a0second\u00a0quarter\u00a0of the year\u201d.<\/p>\n

\u201dThe Committee\u00a0 cautioned\u00a0that this recovery could relapse in a more protracted recession if strong and bold\u00a0monetary and\u00a0fiscal policies\u00a0are not\u00a0activated\u00a0immediately to sustain\u00a0it,\u201d he stressed.<\/p>\n

To guard against this, the MPC noted that \u201cthe\u00a0expected fiscal stimulus and non-oil federal receipts, as well as improvements in economy-wide non-oil\u00a0exports, especially agriculture, manufacturing, services and light industries, all\u00a0expected to drive\u00a0the\u00a0growth\u00a0impetus\u00a0for\u00a0the rest of the year,\u00a0must be pursued\u00a0relentlessly.\u201d<\/p>\n

The Committee said it \u201cexpects that timely\u00a0implementation\u00a0of the 2017 Budget,\u00a0improved management\u00a0of\u00a0foreign exchange,\u00a0as well as security\u00a0gains across the\u00a0country, especially, in the Niger Delta\u00a0and North Eastern\u00a0axis,\u00a0should be firmly anchored,\u00a0to\u00a0enhance\u00a0confidence\u00a0and sustainability of\u00a0economic recovery\u201d.<\/p>\n

The MPC of the CBN also expressed concern over the\u00a0increasing\u00a0fiscal\u00a0deficit\u00a0estimated at\u00a0N2.51\u00a0trillion in the first half of this year.<\/p>\n

Emefiele lamented \u201cthe crowding out\u00a0effect\u00a0of\u00a0high\u00a0 government borrowing.\u201d<\/p>\n

He called for \u201cfiscal restraint to check the growing deficit\u201d and also disclosed that the committee had once again resolved to retain lending rates at 14%.<\/p>\n

The Committee welcomed the government\u2019s proposal to\u00a0issue\u00a0sovereign-backed\u00a0promissory notes of\u00a0about N3.4 trillion for the settlement of accumulated local debt and contractors\u00a0arrears.<\/p>\n

The Committee advised\u00a0the\u00a0 CBN \u201cto monitor the release process of the promissory notes to avoid an excessive injection of liquidity into the system, thereby offsetting the gains so far achieved in inflation and exchange rate stability\u201d.<\/p>\n

On why the MPC chose to retain Monetary Policy Rate (MPR) for so long, Emefiele noted that \u201cthere\u00a0is a need for a low interest rate because we know that low interest rate will make it easy for people who want to borrow money to borrow at low rates, we know it will inject liquidity into the system but we are saying that inflation at 18.8% and even today at 16.1% is still considered very high in the light of studies that have been conducted\u201d.<\/p>\n

He explained that \u201cthere are acceptable models for computing the inflation threshold and this models have computed inflation threshold for Nigeria at a range of between 10%-12%; what that means is that when inflation rises above 12%, no matter the action that you take to stimulate growth, it will retard growth.\u201d<\/p>\n

Emefiele said the authorities \u201cneed to look at how we reverse the trend in inflation and we\u2019re happy that we have done so from 18.8%-16.1% and we are hopeful that it will continue to trend downwards and as this is achieved, we also believe that there is a need to ease rate and also bring interest rate down\u201d.<\/p>

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Defending the decision to retain interest rate at 14%, Emefiele noted that \u201cwe\u2019re truly not there yet because of the reasons I have stated but also more importantly because we believe that easing now or reducing interest rate will pull the real interest rate further into the negative territory which is a disincentive to investment\u201d. \u201cThose are some of the fundamental issues,\u201d he added.<\/p>\n

A disincentive to investment, he stressed \u201cwill hurt our stability that we have so far achieved in the forex market and there is a need for us to ensure that this does not happen\u201d.<\/p>\n

\u201cThat is the rationale and we would continue as much as possible to continue to provide this explanation. We understand the pain but the actions of the MPC will be reflected in whatever direction that we think is good for Nigeria.\u201d<\/p>\n

At the end of the meeting, members of the MPC resolved to retain\u00a0the MPR at 14 per cent;\u00a0retain\u00a0the Cash Reserve Ratio (CRR) at 22.5 per cent;\u00a0retain\u00a0the Liquidity Ratio at 30.00 per cent; and\u00a0retain\u00a0the Asymmetric corridor at +200 and -500 basis points around the MPR.<\/p>\n

The Committee\u00a0is satisfied with\u00a0the gradual\u00a0but consistent\u00a0decline\u00a0in\u00a0inflationary pressure\u00a0in the domestic economy,\u00a0noting\u00a0\u201dits\u00a0substantial base effect,continuous improvements\u00a0in the\u00a0naira exchange rate across all segments of the foreign exchange\u00a0 market,\u00a0and\u00a0considerable signs\u00a0of\u00a0improved\u00a0i nvestments\u00a0 inflow\u201d.<\/p>\n

Emefiele said \u201cthe \u00a0Committee\u00a0welcomed\u00a0the\u00a0move by\u00a0the fiscal\u00a0authorities\u00a0to engage the services of\u00a0asset-tracing\u00a0experts\u00a0to investigate the tax payment status of 150 firms and individuals\u00a0in\u00a0an\u00a0effort to close some of the loopholes\u00a0in tax collection,\u00a0towards\u00a0i mproving\u00a0government revenue\u201d.<\/p>\n

However, the Committee expressed concern\u00a0about the slow implementation\u00a0of the 2017 Budget and called on\u00a0the\u00a0 authorities to ensure\u00a0timely\u00a0implementation, especially,\u00a0of\u00a0the capital portion to realise the\u00a0objectives of\u00a0the Economic Recovery and Growth Plan (ERGP).<\/p>\n

Regarding complaints by banks of liquidity constraints caused by the apex bank\u2019s mop-up activities, Emefiele said he was once there (private sector banking system), adding that \u201ctheir business is to complain because they\u2019re economic agents that are interested in making profit\u201d. \u201cWe, as regulators looking at all the data that confront us, certainly know that we must be alive to our responsibilities and do our work.\u201d<\/p>\n

Doing their work, he said \u201cmeans we must do what we have done to continue to achieve the sliding trend in inflation and stabilise the forex market, that is what we are doing and we will continue to do so\u201d.<\/p>\n

On the forex trend the CBN governor the apex bank had \u201cleft that now for the market\u201d. \u201cThe market will decide. Gone are the days when CBN will be seen to be leaning on somebody as to whatever he thinks is the direction of the market will be,\u201d he said.<\/p>\n

However, the CBN, Emefiele said, \u201cremains a player and from time-to-time, given our sensitivities regarding where we think the market will be, we would intervene and that is why you are seeing the level of intervention in the last five months. The intensity of that intervention will continue\u201d. The Nation<\/strong><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Central Bank of Nigeria (CBN) has warned that Nigeria\u2019s fragile growth risks falling back into recession. Addressing reporters at the end of the bi-monthly Monetary Policy Committee Meeting in Abuja yesterday, CBN Governor Godwin Emefiele said \u201cforecasts\u00a0of key\u00a0macroeconomic\u00a0indicators\u00a0point to a\u00a0fragile\u00a0economic\u00a0recovery\u00a0in the\u00a0second\u00a0quarter\u00a0of the year\u201d. \u201dThe Committee\u00a0 cautioned\u00a0that this recovery could relapse in a more protracted …<\/p>\n","protected":false},"author":6,"featured_media":15858,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[23],"tags":[36],"coauthors":[2391],"class_list":["post-15920","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-business","tag-cbn"],"yoast_head":"\nEconomic recovery can relapse, warns CBN - National Wire<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Economic recovery can relapse, warns CBN - National Wire\" \/>\n<meta property=\"og:description\" content=\"The Central Bank of Nigeria (CBN) has warned that Nigeria\u2019s fragile growth risks falling back into recession. Addressing reporters at the end of the bi-monthly Monetary Policy Committee Meeting in Abuja yesterday, CBN Governor Godwin Emefiele said \u201cforecasts\u00a0of key\u00a0macroeconomic\u00a0indicators\u00a0point to a\u00a0fragile\u00a0economic\u00a0recovery\u00a0in the\u00a0second\u00a0quarter\u00a0of the year\u201d. \u201dThe Committee\u00a0 cautioned\u00a0that this recovery could relapse in a more protracted …\" \/>\n<meta property=\"og:url\" content=\"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/\" \/>\n<meta property=\"og:site_name\" content=\"National Wire\" \/>\n<meta property=\"article:published_time\" content=\"2017-07-26T10:26:24+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/nationalwire.com.ng\/sub\/wp-content\/uploads\/2017\/07\/images-2-4.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"252\" \/>\n\t<meta property=\"og:image:height\" content=\"200\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Friday Ekeoba\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/nationalwire.com.ng\/sub\/#website\",\"url\":\"https:\/\/nationalwire.com.ng\/sub\/\",\"name\":\"National Wire\",\"description\":\"About Nigerians, Nigerian Business and Other Stories\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/nationalwire.com.ng\/sub\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/#primaryimage\",\"url\":\"https:\/\/nationalwire.com.ng\/sub\/wp-content\/uploads\/2017\/07\/images-2-4.jpg\",\"contentUrl\":\"https:\/\/nationalwire.com.ng\/sub\/wp-content\/uploads\/2017\/07\/images-2-4.jpg\",\"width\":252,\"height\":200},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/#webpage\",\"url\":\"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/\",\"name\":\"Economic recovery can relapse, warns CBN - National Wire\",\"isPartOf\":{\"@id\":\"https:\/\/nationalwire.com.ng\/sub\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/#primaryimage\"},\"datePublished\":\"2017-07-26T10:26:24+00:00\",\"dateModified\":\"2017-07-26T10:26:24+00:00\",\"author\":{\"@id\":\"https:\/\/nationalwire.com.ng\/sub\/#\/schema\/person\/e2ab303e561d755b325fc9cea3854927\"},\"breadcrumb\":{\"@id\":\"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/nationalwire.com.ng\/sub\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Economic recovery can relapse, warns CBN\"}]},{\"@type\":\"Person\",\"@id\":\"https:\/\/nationalwire.com.ng\/sub\/#\/schema\/person\/e2ab303e561d755b325fc9cea3854927\",\"name\":\"Friday Ekeoba\",\"url\":\"https:\/\/nationalwire.com.ng\/sub\/author\/friday\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Economic recovery can relapse, warns CBN - National Wire","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/nationalwire.com.ng\/sub\/economic-recovery-can-relapse-warns-cbn\/","og_locale":"en_US","og_type":"article","og_title":"Economic recovery can relapse, warns CBN - National Wire","og_description":"The Central Bank of Nigeria (CBN) has warned that Nigeria\u2019s fragile growth risks falling back into recession. 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