Regulatory Alerts2014-04-07 | NO 94Central Bank of Nigeria Communique No. 94 (With Personal Statements of the Members) of the Monetary Policy Committee Meeting, March 24-25, 2014
The CBN MPC voted unanimously (with one abstention) on various aspects concerning Nigeria's monetary policy. Here is a concise summary of their decisions: 1. **MPR at 12%:** All members agreed to keep the Monetary Policy Rate (MPR) unchanged at 12%. This move aims to maintain price stability and promote economic growth. 2. **Symmetric Corridor Around MPR:** The symmetric corridor of +/- 200 basis points around the MPR remains in place, maintaining monetary policy stance consistent with the achievement of single-digit inflation by the end of 2014. 3. **Liquidity Ratio at 30%:** Members agreed to retain the Liquidity Ratio for banks operating in Nigeria at 30%. This is intended to maintain adequate level of liquid assets within the financial system. 4. **Cash Reserve Requirement on Private Sector Deposits:** All members supported increasing the Cash Reserve Requirement (CRR) on private sector deposits from 10% to 15%, with the aim of managing excess liquidity and stemming inflationary pressures. This also applies to public sector deposits in local currency. 5. **Cash Reserve Requirement on Public Sector Deposits:** The MPC agreed to introduce a CRR on government domiciliary account deposits. It was earlier decided at the January 2014 MPC meeting that the CRR on public sector deposits would be 75%. This move is expected to prevent any potential abuse or misuse of these funds, which could have implications for the country's inflation and exchange rate. 6. **Foreign Exchange Policies:** The committee continues to monitor foreign exchange market developments and will continue its interventionist stance in managing pressures on the Naira exchange rate. 7. **Banking Sector Regulation and Supervision:** Members agreed that the CBN will continue to implement regulatory measures to ensure the stability of the financial system, protect depositors' funds, and promote transparency and corporate governance standards in the banking industry. 8. **Financial Inclusion:** The MPC reaffirmed its commitment to promoting financial inclusion by ensuring access to affordable financial services for all Nigerians. It also noted the progress made so far and identified areas where further efforts are needed.