In a widely anticipated move, the MPC voted to maintain status quo on all monetary policy parameters. The rationale being that the global economy is reeling in uncertainty and the domestic economy is fragile. In the circumstances, this is a prudent and cautious move. The guidance is that the CBN will remain vigilant in the light of these vulnerabilities.
Monetary policy rules suggest that the Committee is adopting the fixed rule approach – which means a passive mode irrespective of current happenings and events. The problem with this approach is that it is usually too simple to respond quickly and effectively to complex events. The good news is that the CBN reiterated its commitment to keep a watchful eye on global and domestic fragilities and intervene when necessary.
In the slides, you will find an analysis by Bismarck Rewane and the FDC Think Tank on Channels TV. In the presentation, he attempts to evaluate the likely impact of the MPC’s decision on corporates, the unemployed and the economy in general.
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