The Monetary Policy Committee (MPC), of the Central Bank of Nigeria (CBN), has voted to reduce the Monetary Policy Rate (MPR), from 12.5% to 11.5%. This was disclosed by Governor, CBN, Godwin Emefiele, while reading the communique at the end of the MPC meeting on Tuesday.
The committee retained CRR at 27.5%, stating that the recent inflationary pressures is not driven by monetary policies, rather as a result of structural policies.
Highlights of the Committee’s decision
- Reduce the MPR by 100 basis points, from 12.5% to 11.5%
- Adjust asymmetric corridor, from +200/-500 to +100/-700 basis points around the MPR
- Retain CRR at 27.5%
- Retain liquidity ratio at 30%
According to Emefiele, the Committee reviewed the choices before it, bearing in mind its primary mandate of price stability, and the need to support the recovery of output growth. Consequently, the Committee noted that the likely action aimed to address the rise in domestic prices would have been to tighten the stance of policy, as this will not only moderate the upward pressure on prices, but will also attract fresh capital into the economy, and improve the level of the external reserves.
The Committee however, noted that this decision may stifle the recovery of output growth, and drive the economy further into contraction.
On easing the stance of policy
The MPC was of the view that this action would provide cheaper credit to improve aggregate demand, stimulate production, reduce unemployment, and support the recovery of output growth.
In addition, the Committee noted the tendency of an asymmetric response to downward price adjustments by ‘Other Depository Corporations’, thus undermining the overall beneficial impact of a reduction, to the cost of capital.
After all considerations, members were of the opinion that the option to loose will complement the Bank’s commitment to sustain the trajectory of the economic recovery, and reduce the negative impact of COVID-19.
He also stated that, liquidity injections are expected to stimulate credit expansion to the critically impacted sectors of the economy, and offer impetus for output growth and economic recovery.
Based on the foregoing, the Committee decided to reduce the MPR by 100 basis points to 11.5% and adjust the asymmetric corridor to +100/-700 around the MPR.
MPC projects economic growth
Recall, that the Nigerian economy contracted by 6.1% (year-on-year) in the second quarter of the year, as a result of the disruptions caused by the COVID-19 pandemic. The MPC however, projects a positive growth in the last quarter or at least Q1 2021.
“With a persistent focus on activities meant to reverse the contraction, the MPC projects growth at positive levels in Q4 2020, or latest by Q1 2021, based on the anticipated positive results from the coordinated and sustained interventions by both the monetary and fiscal authorities.”
BREAKING: Buhari in crucial meeting with Obasanjo, other former heads of state
President Muhammadu Buhari is currently presiding over a National Security Council meeting with some former heads of state and some security chiefs.
Although the agenda of the meeting is not made public, issues bothering on the current security situation in the country are believed to top the agenda. This follows the outbreak of violence across the country during the protest against police brutality and extra-judicial killings, which has led to the loss of lives and destruction of public assets and private properties.
According to media reports, the meeting which is coordinated from the Council Chamber of the Presidential Villa, Abuja, has in virtual attendance General Yakubu Gowon (rtd.), former President Olusegun Obasanjo, Gen Abdulsalami Abubakar (rtd.), former President Goodluck Jonathan and former head of interim national government, Chief Ernest Shonekan.
Others who are physically present at the council chambers are Vice President Yemi Osinbajo; National Security Adviser, Major General Babagana Monguno (rtd.); Chief of Defence Staff, General Gabriel Olanisakin; Inspector-General of Police, Mohammed Adamu; Director-General, Department of State Services, Yusuf Bichi; and Director-General, National Intelligence Agency, Ahmed Rufai, among others are attending with the President.
This meeting is coming a day after President Buhari’s national broadcast on the security situation in the country calling for an end to the #EndSARS protests as their voices have been loudly heard.
Senatorial, State House of Assembly bye-elections postponed – INEC
Senatorial and State House of Assembly bye-elections slated to hold on October 31 in 11 states have been postponed by INEC.
The 6 Senatorial and 9 State House of Assembly bye-elections slated to hold on October 31 in 11 states of the Federation has been postponed by the Independent National Electoral Commission (INEC). The vacancies were as a result of death and resignation of previous members.
According to the statement issued by its National Commissioner & Chairman, Information and Voter Education, Festus Okoye Esq., INEC said the decision was taken after meeting with the 37 Resident Electoral Commissioners (RECs) on Thursday.
— INEC Nigeria (@inecnigeria) October 22, 2020
Though the commission did not categorically state the reason for the postponement, feelers are that it may not be unconnected with the raging #EndSARS protests across the nation.
PDP Govs Declare New Police Act Unconstitutional
Kick against deductions for Police Trust Fund
The Peoples Democratic Party (PDP) Governors’ Forum has called for a repeal of sections of the Police Act recently accented to by President Muhammadu Buhari, insisting that they breached the Nigerian Constitition.
This was contained in a communique issued yesterday after a Zoom meeting held by the PDP governors.
The communique was signed by the Chairman of the forum, Hon. Aminu Tambuwal, who is also the governor of Sokoto State. The governors among other things, urged the president and the National Assembly to repeal Section 4(1) of the Nigeria Police Trust Fund (Establishment) Act, 2019 which “purportedly authorises the President to deduct 0.5 per cent of the total revenue accruing to the Federation Account for the benefit of the Nigeria Police Trust Fund.”
According to the governors, the said deduction is patently unconstitutional.
The communiqué read in part, “The meeting noted the signing of the New Nigeria Police Act, 2020 by Mr. President, Commander in Chief.
“While acknowledging the many important innovations in the new law, the Forum emphasised the need to make the Nigeria Police Council, which has Mr. President as Chairman and 36 state Governors as members, fully operational and the clearing house on all issues bordering on the organisation and administration of the Nigeria Police Force as enshrined in the 1999 Constitution.
“The Forum further observed the discrepancies in S.12(2) and S.12(4) of the Act on the appropriate authority with responsibility to deploy Police Commissioners to the respective States. Whereas S.12(2) gives the responsibility to the Police Service Commission, S. 12(4) gives either the Police Service Commission or Inspector-General of Police the same responsibility.
“This is even more regrettable as the Constitution gives this responsibility to the Police Service Commission (S. 215) (1)(b). We advise that the constitutional provision be upheld.
“Furthermore, the Forum canvassed for appropriate consultations with the Governors of various States on the deployment of Police Commissioners to the States since the Police is a common institution that executes the laws of both the Federal and State governments.
“The Forum implored Mr. President and the National Assembly to repeal Section 4(1) of the Nigeria Police Trust Fund (Establishment) Act, 2019 which purports to authorise the President to deduct 0.5 per cent of the total revenue accruing to the Federation Account for the benefit of the Nigeria Police Trust Fund, as it is patently unconstitutional.
“The beneficiaries of the Federation Account are the Federal, States and Local Governments only. More creative funding options should be explored.”
The PDP governors also expressed concerns over the controversy surrounding the Water Resources Bill, 2020.
“Towards this end, the governors called for greater consultations just as they referred the document to the body of Attorney Generals of PDP controlled states to study and advise accordingly,” it added.
Governors who attended the zoom meeting include: Tambuwal (Sokoto), Dr. Okezie Ikpeazu (Abia), Mr. Udom Emmanuel (Akwa Ibom), Senator Bala Muhammad (Bauchi); and Senator Douye Diri (Bayelsa).
Others are: Dr. Ifeanyi Okowa (Delta); Mr. Dave Umahi (Ebonyi); Hon. Ifeanyi Ugwuanyi (Enugu); Mr. Nyesom Wike (Rivers); Mr. Seyi Makinde (Oyo) and Mr. Bello Muhammad Matawalle (Zamfara).
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