The Monetary Policy Committee of the Central Bank of Nigeria has called on banks and other financial institutions to continue to monitor and respond proactively to threats and vulnerabilities in the foreign exchange market.
In the MPC communiqué, which was released immediately after the committee meeting held last week, the Committee reiterated its call on the banks to sustain its surveillance of deposit money banks activities for the purpose of prompt identification and mitigation of potential vulnerabilities.
It, however, expressed concern on the sustained pressure on food prices, noting risks posed by floods, strikes and insurgencies in various parts of the country to food production and distribution.
“Regarding the tepid turnaround in economic activities in the second quarter of 2017, the employment gains of recovery were still minimal, a number of important job elastic sub-sectors were still weak and may require more fiscal support to regain traction,” it said.
The MPC also expressed concern that the fragility of economic recovery made it imperative to allow more time to make appropriate complementary policy decisions to strengthen the recovery, while it was also of the view that economic activity would become clearer between now and the first quarter of 2018.
In consideration of the headwinds confronting the domestic economy and the uncertainties in the global environment, the Committee decided, by a vote of 6 to 1, to retain the Monetary Policy Rate at 14.0 per cent alongside all other policy parameters.
It pointed to a recent data from the National Bureau of Statistics, which showed that real Gross Domestic Product grew by 0.55 per cent in the second quarter of 2017, against the contractions of 0.91 and 1.49 per cent in the previous quarter of 2017, and the corresponding quarter of 2016, respectively, marking the technical exit of the Nigerian economy from recession.
Non-oil real GDP grew by 0.45 per cent in Q2, 2017, driven largely by agriculture (3.0 per cent), industry (1.1 per cent), and construction (0.1 per cent).
The modest growth was attributed to fiscal injections from the implementation of the Economic Recovery and Growth Plan, and enhanced supply of foreign exchange, arising from improved crude
oil prices.
