Regulatory Alerts2014-09-19 | MPC-97-2014-1Central Bank of Nigeria Communique No. 97 of the Monetary Policy Communique Meeting of September 18 and 19, 2014
The CBN's MPC held a meeting on the 17th and 18th of September, 2014, where it reviewed the economy's performance and determined the best course of action. Key points from the meeting included: - Nigeria's GDP expanded by 6.5% in Q2, 2014, driven mainly by the non-oil sector. The agricultural and information and communication technology (ICT) sectors performed particularly well. - The CBN intervened in the forex market to boost liquidity and maintain exchange rate stability. In July 2014, the central bank spent over US$5 billion on interventions. - Headline inflation rose slightly to 7.8% in August from 7.6% in July due to increases in prices of solid minerals and energy products. Core inflation, however, remained stable at 9.1%. - The central bank's balance sheet expanded by N2.5 trillion between Q4, 2013, and Q2, 2014. Liquidity in the banking system increased as banks held large excess reserves of over N300 billion despite having ample opportunities for profitable lending to the real sector. - The CBN voted to retain the MPR at 12% with a corridor of +/- 200 basis points around the midpoint, the public sector Cash Reserve Requirement at 75%, and the private sector Cash Reserve Requirement at 15%. There was no consensus on further tightening or loosening monetary policy.