CENTRAL BANK OF NIGERIA COMMUNIQUÉ NO. 138 OF THE 281ST MONETARY
POLICY COMMITTEE MEETING HELD ON THURSDAY, 16th AND FRIDAY, 17th
SEPTEMBER 2021
The Monetary Policy Committee (MPC) met on the 16th and 17th September,
2021, on a relatively comforting note of a moderate global output growth
recovery and improved global trade. The performance of the global economy
in the first two quarters of the year and into the third quarter, remained
favourable with positive outlook for the rest of the year. However, cautious
optimism persists, driven primarily by mutating and more fatal strains of the
COVID-19 virus and disparities in the progress of vaccinations across several
countries. In the domestic economy, output growth performance continued to
improve, signposting the positive impact of the unwavering fiscal and monetary
support by both the fiscal and monetary authorities to revive and sustain
economic growth, post pandemic. The Committee reviewed the developments
in the global and domestic economic environments in the third quarter of 2021,
as well as the outlook for the rest of the year.
Ten (10) members of the Committee attended this meeting.
Global Economic Developments
The Committee noted the continuing rebound in the global recovery as several
advanced and emerging market economies posted promising second quarter
output growth figures, despite the uneven progress in vaccination coverage.
The MPC noted that the uncontained spread of the COVID-19 virus continues to
pose downside risks to global recovery in 2021 and into 2022. The MPC further
noted that despite the strong output growth identified in some Advanced
Economies, several developing economies were still lagging in vaccination
progress. Members, emphasized that the widespread availability of vaccines,

remained vital to surmounting the Pandemic and attaining full and all-inclusive
recovery of the global economy. Despite the challenges posed by the ongoing
mutation of the coronavirus, governments across the globe remain focused on
easing business restrictions and resuscitating economic activities. Consequently,
the International Monetary Fund (IMF), maintained its aggregate projection for
global growth in 2021 at 6.0 per cent, but increased its projection for the
Advanced Economies to 5.6 per cent from a previous 5.1 per cent, while that for
the Emerging Markets and Developing Economies (EMDEs) was downgraded to
6.3 per cent from 6.7 per cent.
Price development across several Advanced Economies has remained on a
sustained uptrend and exceeding their long run objectives. This is expected to
continue in the short to medium term as against earlier forecasts that the upward
shift was transient. Consequently, several central banks of advanced economies
are
currently
considering
early
commencement
of
monetary
policy
normalization, even though policy rate adjustments are not expected in the
medium term. Across several Emerging Market and Developing Economies,
inflationary pressures remained mixed, as some economies had much higher
rates than their peers, due to lingering exchange rate pressures, capital flow
reversals, high energy costs, supply chain disruptions and poor response to policy
stimulus resulting from structural bottlenecks.
In the global financial markets, the Committee noted that while demand for
equities remained strong, an indication of renewed market confidence, gold
price still maintained its post-Pandemic high, reflecting the hedging by investors
against a possible rebound of the Pandemic. Long-term sovereign bond yields
are expected to improve with the commencement of monetary policy
normalization by central banks of advanced economy. Committee members,
however, expressed cautious optimism for a gradual normalization of monetary
policy by these central banks, as a sharp retreat of policy stimulus may plunge
the global economy into a financial crisis again. This may also increase the
uncertainty around the full recovery of several Emerging Market and Developing
Economies. The MPC, therefore, called on the Bank to put in place measures to

moderate the likely impact of the normalization of monetary policy on the
domestic economy.
Domestic Economic Developments
In the second quarter of 2021, there was a significant improvement in the real
Gross Domestic Product (GDP), which grew by 5.01 per cent compared with 0.51
and -6.10 per cent in the previous quarter and corresponding quarter of 2020,
respectively. This recovery was attributed to the non-oil sector, driven by a
rebound in services sector and continued growth in agriculture sector. The oil
sector contracted further by -12.65 per cent (year-on year) in the second quarter
of 2021, compared with -2.21 per cent in the previous quarter. This deeper
contraction, was attributed to several factors: including declining crude oil
production at two crude streams in the country, associated with leakages in two
major pipelines; deteriorating oil production infrastructure; poor pipeline
maintenance; and the need to comply with OPEC+ production ceiling.
The Committee noted the moderate improvement in both the Manufacturing
and Non-Manufacturing Purchasing Manager’s Indices (PMIs), though still below
the 50-index point benchmark, showed a marked improvement over time. In
August 2021, the Manufacturing and non-Manufacturing PMIs improved to 46.9
index points apiece, compared with 46.6 and 44.8 index points, respectively, in
July 2021. This was attributed to an increase in new orders, driven largely by rising
demand, uptrend in business activity and further normalization of economic
activities.
Similarly,
the
employment
level
index
component
of
the
Manufacturing and non-Manufacturing PMIs in August 2021 improved to 49.4
and 48.8 index points, respectively, compared with 46.5 and 47.0 index points in
July 2021. The Committee expressed optimism that with the current level of
monetary and fiscal stimuli, as well as efforts to increase vaccination and
contain the Pandemic, the economy will continue to improve in the short-to
medium term.
The Committee reviewed the performance of the Bank’s interventions to sustain
the recovery of output growth and address the downside risks to other external

and domestic shocks to the economy. Interventions continued largely in
Manufacturing, Agriculture, Energy/infrastructure and Micro, Small, and Medium
Enterprises (MSMEs).
The Bank under its Anchor Borrowers Programme (ABP) has cumulatively
released the sum of N798.09 billion to 3.9 million smallholder farmers cultivating
4.9 million hectares of land across the country. Out of this for the 2021 wet season
farming, the Bank released the sum of ₦161.18 billion to 770,000 small-holder
farmers cultivating seven (7) commodities on 1.10 million hectares across the
country. While harvesting for the 2020 dry season under the Programme is
rounding up, harvesting activities have commenced for the 2021 wet season
cultivation. The Strategic Maize Reserve Programme of the CBN has been useful
in moderating maize prices by directly targeting large feed mill producers. Under
its Commercial Agriculture Credit Scheme (CACS), the CBN has supported 657
large-scale agricultural projects, to the tune of N708.39 billion.
To support MSMEs across the country, the Bank disbursed N134.57 billion to 38,140
beneficiaries under the Agribusiness/Small and Medium Enterprise Investment
Scheme (AGSMEIS), and for the Targeted Credit Facility (TCF), the sum of N343.21
billion has been released to 726,198 beneficiaries, comprising 602,730
households and 123,468 Small and Medium Enterprises.
Under the Real Sector Facility, the Bank released the sum of N1.00 trillion to 269
real sector projects, of which 140 are in light manufacturing, 71 in agro-based
industry, 47 in services and 11 in mining. Under the Healthcare Sector Intervention
Facility (HSIF), N103.02 billion has been disbursed for 110 healthcare projects, of
which 27 are pharmaceutical, 77 hospitals and 6 other healthcare service
projects. The Bank has also disbursed a total of N145.99 billion under its Non-Oil
Export Stimulation Facility (NESF). The CBN has revised the guidelines, working
with Nigerian Export-Import Bank to improve access to the intervention and
stimulate non-oil export growth in Nigeria.
Under the National Mass Metering Programme (NMMP), N41.06 billion has been
disbursed to ten (10) DisCos, for the procurement and installation of 759,748

electricity meters. Under the Nigerian Electricity Market Stabilization Facility - 2
(NEMSF-2), the Bank has released the sum of N145.66 billion to 11 DisCos as loans
to provide liquidity support and stimulate critical infrastructure investment to
improve service delivery and collection efficiency.
In furtherance of its intervention in the energy sector, the Bank has disbursed
N39.20 billion to six (6) beneficiaries to improve gas-based infrastructure to
support the Federal Government’s Auto-Gas Conversion Programme. The Bank
has also encouraged Deposit Money Banks (DMBs) to participate in the Solar
Connection Facility (SCF) to improve energy access in the rural areas.
To promote entrepreneurship development among Nigerian youth, the Bank
recently
approved
the
implementation
of
the
Tertiary
Institutions
Entrepreneurship Scheme (TIES). The Scheme is designed to promote
entrepreneurial activities and foster job creation among Nigerian youths.
The Committee applauded the continued moderation in headline inflation for
the fifth consecutive month to 17.01 per cent (year-on-year) in August 2021 from
17.38 per cent in July 2021. The continued decrease was attributed to a marginal
decline in the food component to 20.30 per cent in August 2021 from 21.03 per
cent in July 2021. The core component, also, declined to 13.41 per cent in August
2021 from 13.72 per cent in July 2021. The MPC noted that headline inflation
remained well above the Bank’s benchmark corridor of 6 – 9 per cent, but
expressed optimism that with sustained interventions by the Bank, food
production will continue to improve, thus moderating headline inflation further.
The Committee, thus, urged the fiscal authority to build on earlier efforts to
articulate a clear strategy to attract private sector investment while resuscitating
critical infrastructure to improve the ease of doing business in the country.
Members observed that broad money supply (M3) rose to 5.83 per cent in
August 2021, compared with 2.91 per cent in July 2021. This was largely driven by
the growth of Net Foreign Assets and Net Domestic Assets by 12.35 and 4.30 per
cent in August 2021, compared with 1.84 and 3.17 per cent in July 2021,
respectively. The growth in Net Foreign Assets was largely driven by increase in

foreign asset holdings of commercial and merchant banks. The increase in Net
Domestic Assets reflects the boost to aggregate credit net, which increased to
8.14 per cent in August 2021, from 5.71 per cent in July 2021.
In the money market, the monthly weighted average Inter-Bank Call and Open
Buyback (OBB) rates increased to 13.45 and 12.97 per cent in August 2021 from
10.72 and 11.60 per cent in July 2021, respectively. This increase reflected the
tight liquidity conditions in the banking system during the review period as the
Bank curtailed excess system liquidity.
The MPC noted the moderate improvement in the equities market in the review
period, as the All-Share Index (ASI) increased by 2.67 per cent from 37,907.28 on
June 30, 2021, to 38,920.50 on September 14, 2021. Market Capitalization (MC)
also increased by 2.63 per cent from N19.76 trillion to N20.28 trillion over the same
period,
reflecting
improvement
in
investor
confidence
following
the
strengthening of output growth.
The MPC noted that the Capital Adequacy Ratio (CAR) and the Liquidity Ratio
(LR) both remained above the prudential limits at 15.2 and 41.7 per cent,
respectively at end-July 2021. The Committee, also, welcomed the improvement
in the Non-Performing Loans (NPLs) ratio at 5.4 per cent in July 2021, compared
with 5.7 per cent in June 2021. The Committee thus, urged the Bank to sustain
current efforts to bring NPLs below the 5.0 per cent prudential benchmark.
The Committee noted the improvement in lending to the real sector following
the introduction of the Loans-to-Deposit Ratio (LDR) in 2019. Industry gross credit
increased by N6.63 trillion from N15.57 trillion at end-May, 2019 to N22.20 trillion
at end-July, 2021. The credit growth was largely recorded in manufacturing, oil
and gas and agriculture sectors.
The Committee noted the significant increase in the external reserves which rose
to US$35.97 billion at end-August 2021 from US$33.49 billion at end-July 2021,
representing an increase of 7.41per cent. It also welcomed the further increase
to US$36.03 billion on September 13, 2021.

Outlook
The outlook for both the global and domestic economies appears mixed. This is
due to lingering uncertainties over the end of the COVID-19 pandemic as well
as continued mutation of the virus. The slow and uneven pace of vaccination in
developing economies is also compromising the achievement of global herd
immunity, thus imposing a considerable headwind to the attainment of the
global growth forecast.
Some central banks in advanced economies have given guidance of intended
commencement of monetary policy normalization as monetary and fiscal policy
across major advanced and emerging market economies have remained
robust. This would constitute a further headwind to the full and inclusive recovery
of the global economy due to the likely rise in cost of capital. The global
economy is confronted with more headwinds than tailwinds, evidenced by the
multitude of conflicting signals emerging from various major economies.
Available data and forecasts for key macroeconomic variables for the Nigerian
economy, suggest further rebound in output growth for the rest of the year. This
will however be hinged on the continued stability in oil price and robust
vaccination in Nigeria and across other countries. Foreign exchange market
stability, further reduction in inflationary pressure in the economy and continued
interventions by the monetary and fiscal authorities are very important factors to
sustain the recovery momentum. Consequently, the Nigerian economy is
forecast to grow in 2021 by 2.86 per cent (CBN), 3.0 per cent (FGN) and 2.5 per
cent (IMF).

The Committee’s Considerations
The Committee noted the recovery in output growth and improving PMIs in the
second quarter and urged the Bank to maintain the momentum of its current
policy measures to sustain positive and inclusive real GDP growth.
The increasing level of insecurity in parts of the country remained a crucial point
of concern for the MPC as its persistence could adversely impact business

confidence and derail the recovery. It continued to call on the Federal
Government to prioritize security surveillance in farming communities as the
increased supply of food would play a significant role in stabilizing
macroeconomic fundamentals.
The Committee applauded the steady but moderate decline in domestic prices
as inflation decelerated for the fifth consecutive month with forecast indicating
a continued downward trend. The Committee also welcomed ongoing efforts
towards revitalising the Nigeria Commodity Exchange (NCX) to improve the
supply value chain, curtail the speculative activities of middlemen in the
agricultural sector, and consequently drive down prices of key commodities
such as paddy rice, maize, wheat and sorghum, amongst others.
Members applauded the relentless effort by the Bank and other collaborators in
ensuring the eventual take off of the Nigerian Infrastructure Corporation
(INFRACORP), as this will improve the business environment, attract new
investment and create new jobs in the Nigerian economy. The MPC further
emphasised the importance of investment in transportation networks, power
supply and telecommunication as these have a multiplier effect on other sectors
of the economy. In addition to the INFRACORP initiative, Members urged the
fiscal authority not to relent on other complementary infrastructure initiatives
such as Public-Private-Partnerships and engagement of Nigeria’s huge diaspora
through the issuance of diaspora bonds to fund specific projects.
The MPC noted the moderate improvement in the equities market and
commended the sustained investor confidence in the Nigerian economy. The
Committee however called on the Federal Government to continue to improve
the ease of doing business in Nigeria to retain the current patronage of the
Nigerian economy by foreign investors.
Members applauded the continued resilience of the banking system, noting the
progressive decline in the non-performing loans ratio, and broad improvement
in all banking system parameters, despite the downside risks posed by the
Pandemic to the smooth running of businesses. While the Committee was

cognizant of the credit risks associated with lending in the current economic
climate, it urged Nigerian banks to extend more credit to businesses and
consumers to facilitate a seamless recovery of output growth, reduce
unemployment and stabilize prices.
On the management of the exchange rate, the Committee applauded the
Bank for improving foreign exchange supply in the economy to meet legitimate
business and consumer demand. Members thus, urged the Bank to take further
steps to restrict the activities of unauthorised and illegal dealers in the foreign
exchange market, stating that all foreign exchange transactions must be
conducted at the I&E window to ensure transparency and stability. The
Committee, thus, called on the Bank to intensify surveillance over foreign
exchange sales and utilisation by commercial banks and customers, to ensure
that operators adhere to stipulated guidelines set by the CBN. The Bank thus,
maintains its resolve to continue to restructure the foreign exchange market and
will pursue all recent policies targeted at sanitizing the market to improve
transparency and proper functioning to eliminate illegal foreign exchange
dealers in the economy.
On Government revenues, members urged the Federal Government to improve
its tax collection in order to reduce its dependence on oil revenues and reduce
its exposure to counter-cyclical shocks.
The Committee emphasised the growing need to improve the agricultural value
chain, particularly in key commodity products like cocoa, palm oil and cashew
to diversify the country’s export receipts. It, therefore, called on the Bank to
support manufacturing initiatives that could achieve this objective.
The Committee applauded the Bank for its resilience and robust efforts in
managing the downside risks to growth and the upside risks to inflation since the
outbreak of the Pandemic, while charting a stable path for the economy to
continue to expand its potential capacity through investment in infrastructure.

Overall, the MPC assessed the headwinds and tailwinds to growth, as well as,
the upside risks to inflation, noting the immense effort by both the monetary and
fiscal authorities to achieve a substantial recovery in output growth and
decrease in inflation. The Committee urged the Presidential Task Force on
COVID-19 to intensify efforts toward procurement of more vaccines and the
vaccination of more people to ensure that herd immunity is achieved.
The Committee’s Decision
The MPC expressed delight at the robust recovery of output growth during the
second quarter and the continued decline in inflation. Members, however, reiterated the need to put in place further measures to drive down inflation and
improve real returns on investment. The MPC noted the unequivocal importance
of credit growth to the sustained recovery of output and the moderation in price
development as supply improves. It thus, called on the Bank to maintain
adequate surveillance on banks to ensure compliance with its extant credit
policy, while ensuring that they are not unduly exposed to credit risks.
The Committee also noted the relevance of the Bank’s suite of interventions to
the overall system credit, urging its continued use to fund sectors with high
employment-generating capacity.
MPC weighed the pros and cons of tightening, holding or loosening the stance
of policy, noting the impact on output growth, price development,
unemployment and exchange rate.
Members felt that tightening will contract the current level of system liquidity,
and thus reduce demand pressure in the foreign exchange market, given that
the current MPR at 11.5 per cent, CRR at 27.5 per cent and liquidity ratio at 30.0
per cent is already a tightening stance. This will, however, raise the cost of credit
and reduce the volume of credit to the private sector.
On loosening, the Committee felt that this would lower retail interest rates and
improve the ability of obligors to repay their obligations, with a complementary
reduction in NPLs. The gradual downward movement of inflation may, however,

be compromised if policy accommodation is increased, leading to a further
widening of the negative real interest rate and thus exacerbating capital
outflows as investment in naira denominated assets become less attractive.
Members considered that a hold stance would allow the current recovery of
output growth and decline in inflation to continue smoothly, thus gradually
moving the economy to a sustainable path before adjustments are made to the
stance of policy.
Based on the above considerations, the MPC made the decision to hold all
policy parameters constant; believing that a hold stance will enable the
continued permeation of current policy measures in supporting the recorded
growth recovery and macro-economic stability.
The Committee thus decided by a unanimous vote to retain the Monetary Policy
Rate (MPR) at 11.5 per cent.
In summary, the MPC voted to:
i.
Retain the MPR at 11.5 per cent;
ii.
Retain the Asymmetric Corridor of +100/-700 basis points around the MPR;
iii.
Retain the CRR at 27.5 per cent;
iv.
Retain the Liquidity Ratio at 30 per cent.
Thank you.
Godwin I. Emefiele
Governor, Central Bank of Nigeria
17th September, 2021

PERSONAL STATEMENTS BY THE MONETARY POLICY COMMITTEE MEMBERS
1. ADAMU, EDWARD LAMETEK
Global economic recovery remains on course despite uncertainties including
new variants of the coronavirus driving infection resurgence in parts of the world,
uneven access to vaccines, inflation spikes and high public debt levels. In July
2021, the International Monetary Fund (IMF) retained its global growth forecast of
6.0 per cent for 2021. This was broadly indicative of good economic recovery
prospects in the rest of the year. However, across country clusters, recovery
prospects continued to diverge. Whereas the growth outlook for the advanced
economies continued to improve, prospects for emerging markets and
developing economies (EMDEs) had moderated since April 2021, offsetting the
gains from the advanced economies.
Developing countries generally need to take a hard look at the sources of the
divergence with a view to shoving up their growth prospects. Two major factors
deserve immediate attention. They are COVID-19 vaccination and policy
support. The recent surge in COVID-19 infections around the world is having a
greater impact in developing countries owing to the slower pace of vaccine
rollout in most of those countries. Advanced economies have been able to bring
down caseloads more quickly because of speedy vaccine rollout. Among other
imperatives, Nigeria needs to sustain focus on vaccination – vaccine availability
and hesitancy. Whereas, the former appears to be ameliorating, the latter
continues to be a challenge even among health professionals. I believe that this
should pre-occupy not only the Federal Government (FG) but the other tiers of
government as well. Civil society can also play a key role in mobilizing the public
to embrace vaccination.
On policy support, the quality and intensity of support continue to be important
for recovery. We have seen this play out in the advanced economies. Fiscal
support and related measures have been more robust in some regions, Europe,
and the US especially, with correspondingly good recovery prospects. By
contrast, many EMDEs are struggling with fiscal space and trying to build buffers
during this challenging time. Some of them are further constrained by upward
pressures on prices (consumer and exchange rate) to slow down liquidity
injections or even commence normalization. This move could prove to be
premature and inefficient given the fragility of output recovery in those climes,
and the rather unclear path of monetary policy in the advanced economies.
For Nigeria, I do not think the time is rife to look in that direction despite the

constraints emanating from prices. This is primarily because the current pressures
on domestic prices appear firmly rooted in supply shocks related to the COVID19 pandemic and insecurity. Increasing domestic production of goods and
services and easing distribution bottlenecks appeal to me as the proximate
solution to the inflation pressures.

I am convinced that the ongoing interventions by the Federal Government and
the CBN, aimed at boosting domestic production and easing circulation of
goods around the country are yielding expected results in terms of both
economic growth and consumer prices. What’s needed at this point is to rampup fiscal support in key sectors as well as the development finance interventions
of the Bank, while strengthening targeting mechanisms. To this end, greater
collaboration between institutions of the FG and those of the states will afford
policy support greater traction.

My overall judgement is that the extant monetary policy configuration has
continued to serve its purpose of moving the economy out of stagflation, which
partly explains my decision to retain all the parameters at the September 2021
meeting of the Monetary Policy Committee (MPC). Further elaborations on the
considerations that informed that policy choice and my inclination towards
deepening development finance and fiscal support to the real sector are
presented in the rest of this statement.

First, global inflation has trended upwards lately, prompting concerns about
policy normalization in the advanced economies. A sudden monetary policy
normalization by the advanced economies, should inflation persist in those
countries, could tighten financial conditions and complicate recovery in EMDEs
because of the consequential tightening of external financing. Policy makers in
these economies (including Nigeria) need to be mindful of this risk to domestic
output recovery. To prepare for this eventuality, the Bank and the FG need to
deepen current interventions in the real sector to firm up economic recovery as
quickly as possible.
Second, domestic economic growth prospects have improved slowly since the
third quarter of 2020. In fact, the Q2 2021 national accounts posted a real GDP
growth of about 5.0 per cent, reflecting impressive outturns in Services and
Agriculture. However, some subsectors are still struggling and might require extra
policy support. In the Industry cluster, Mining and Quarrying has continued to
decline, offsetting the expansion in Manufacturing, Construction, and others.
Likewise, Finance and Insurance further declined in Q2 2021 owing to a
substantial contraction in Financial Institutions. Clearly, these sub-sectors need

targeted support to re-invigorate activity and restore them to growth. In general,
it is safe to say that the economy is not fully out of the woods. This is further
amplified by the purchasing managers indices (PMIs) – both have remained
below 50 points, suggesting weak output recovery prospects despite the
impressive Q2 outturns. Current staff forecasts indicate a real GDP growth of
about 2.86 per cent for 2021. The IMF and World Bank are slightly less optimistic
with projections of 2.5 and 1.80 per cent, respectively. These forecasts place
Nigeria among countries looking to post the least growth rates in the EMDEs
cluster. I believe that the Nigerian economy could achieve more with extra
policy support.
Third, headline inflation slowed for the fifth straight month to 17.01 per cent in
August 2021. It was the lowest rate since February 2021, driven by a further
slowdown in food inflation especially. It is instructive that core inflation also
slowed in August, suggesting a firmer downward path for headline inflation.
Hopefully, as harvests begin, further deceleration in food prices should bear
positively on overall inflation. Against this consideration, staff forecasts of
headline inflation suggest continued deceleration to year-end. This gives the
Bank some room to continue to push economic activity with targeted
interventions.
Fourth, the strategy of maintaining banking system liquidity close to its optimal
level is an integral part of the current monetary policy orientation aimed primarily
at addressing inflation. In August 2021 both the interbank call and open-buyback (OBB) rates (weighted averages) rose in line with the intensity of the
sterilization actions of the Bank during the period. I believe that the Bank should
sustain this element of the current monetary policy mix to further rein-in inflation
and exchange rate pressures.

Finally, despite some risks and challenges, the last couple of months have
witnessed a broad improvement in the macro-fundamentals. Inflation is slowing,
and I expect seasonal factors like commencement of harvests to complement
the extant measures to bring about speedier deceleration in the months ahead.
The sterilisation actions of the Bank continue to have the desired effect of
keeping banking system liquidity close to optimum as shown by the relative
stability in the interbank interest rates. Those actions need to be sustained
through the rest of the year given that inflation and exchange pressures remain
important policy concerns. Output has continued to recover as shown by the
Q2 real GDP numbers. There are downside risks which may be ameliorated by
sustained policy support and improvement in security. The current measures
aimed at boosting credit to the economy like the innovations around the CRR,
the loan-to-deposit ratio (LDR) and the global standing instruction (GSI) are

working and deserve to be retained. The scope for sustaining credit flow to the
real economy appears large given that the banking system remains sound and
resilient with major financial soundness indicators (FSIs) showing robustness –
growing ratio of Tier-1 capital, declining non-performing loans ratio, rising liquidity
ratio and a relatively high capital adequacy ratio (CAR).
Over the short- to medium-term, I believe, the policy priority continues to be how
to firm up economic recovery. The PMIs are still below 50 points, pointing to a
fragile growth outlook. Economy managers need to maintain focus on the
dominant risks to recovery - COVID-19 virus mutations and insecurity. The Bank
has no direct control over both but could influence government response by
remaining engaged with the relevant authorities on the subjects. Everything
considered, I felt persuaded to retain the major monetary policy parameters at
their levels prior to the September 2021 meeting of the MPC. In effect, I voted to:
1. Retain the MPR at 11.5 per cent.
2. Retain the asymmetric corridor at +100/-700 basis points around the MPR.
3. Retain the CRR at 27.5 per cent.
4. Retain the Liquidity Ratio at 30 per cent.

2. ADENIKINJU, ADEOLA FESTUS
International Economic Development
Development in the global economy provides mixed opportunities for Nigeria in
the near and medium term. The global economic recovery is on pace to deliver
the IMF 2021 GDP growth projections of 6.0%, though with a widening gap
between advanced economies and emerging and developing economies. The
US and China, two of the most important Nigeria trading partners are expected
to deliver respectable GDP growth results in 2021. Commodity prices, including
oil, are doing very well. Bonny Light is over US$72.17/b as of September 14, 2021.
Global oil demand is expected to outpace oil production in 2021. Global trade
is projected to sustain its recovery in Q4 2021. On the other hand, headwinds
include rising global inflation expectation, especially in advanced economies,
the possibility of monetary policy normalisations in the advanced economies,
the uncertainty surrounding COVID-19 and its variants, and the possibility of
capital reversals from developing economies. Digital currencies are receiving
the attention of central banks across the world. Global debt also showed slight
decline in Q1, 2021, for the first time in ten quarters. Nigeria, like other IMF
member countries benefitted from single largest allocation of SDR by the IMF on
August 23, 2021. Advanced and emerging economies received US$375 billion
and US$275 billion, respectively.

Domestic Economic Development
The Economic Report presented by Bank Staff showed a V-shaped recovery of
the economy. Real GDP grew by 0.51% in Q1 2021 and accelerated to 5.01% in
Q2.2020 y-o-y, up from -6.10% in Q2, 2020. Oil GDP contracted by 12.65%, fueled
by decline in oil production, implying that the growth in Q2, 2021 was due to the
performance of non-oil GDP. Both Manufacturing and Non-manufacturing PMIs
improved in August 2021 relative to July 2021, but remained below the threshold
of 50.0 points.
Headline inflation also moderated to 17.01% in August 2021 down from 17.38% in
July 2021, driven primarily by decrease in food inflation. Monetary base
expanded slightly in August 2021 relative to the previous month. M3 grew by
5.83% in August 2021 compared to 2.91% in July 2021, due to rise in both Net

Foreign Assets and Net Domestic Assets. The Nigerian Stock Market was
particularly bullish in August as All Share Index rose from 38,547.08 points in July
2021 to 39,485.65 points in August 2021. This was due to positive movements in
the banking, and oil and gas sectoral indices.
There was increase in money market rates to reflect the market fundamentals.
OBB rate rose from 10.72% in July 2021 to 13.45% in August 2021. Lending rates
declined marginally from 29.8% in June 2021 to 27.19% in July 2021. Savings rate
rose marginally to 1.82% in July 2021 from 1.81% in June 2021. Concurrently,
interest rate spread also reduced marginally.
There was also mixed performance in the external trade sector. Balance of trade
and current account balances, though in deficits, showed improvement in
August 2021, relative to previous month, owing to higher export proceeds and
lower imports of non-oil products. Similarly, remittances inflow increased. Both
FDI and FPI increased month-on- month due to improved yields on fixed income
securities. However, the exchange rate markets experienced significant
pressures leading to depreciation of the naira against the US dollar. The external
reserves rose because of increase in the SDR allocation by the IMF and rise in
third party receipts.
The fiscal sector is significantly challenged. FG retained revenue declined from
N420.2 billion in July 2021 to N376.33 billion in August 2021. The corresponding fall
in government expenditure from N962.05 billion in July 2021 to N781.61 billion in
August 2021 is due to compression in capital spending relative to their budget.
The excess crude oil account was further depleted in the month to augment
government balances.
The Banking System Stability Report presented by the Bank Staff showed that all
the financial soundness indicators remained very good, although there is a slight
deterioration, in Capital Adequacy Ratio, Return on Equity and Return on Assets,
relative to the last MPC meeting. Nevertheless, overall, they showed that the
banking sector is strong, resilient, and safe. Aggregate credit remains in upward
trajectory rising to N22.2 trillion in July 2021, up from N19.29 trillion in
corresponding period in 2020. Aggregate credit by the OFIs also increased
relative to the last MPC meeting. Most sectors of the economy, and households,
benefitted from the increased credit. The various interventions by the Bank is
providing a boost to personal consumptions and economic growth.

My Concern
Nigeria is going through turbulent times economically. Some economic
indicators are moving in the right direction, others are moving in the wrong
direction. The Q2.2021 GDP growth of 5.01% is a positive development, albeit
reflecting base effect. Inflation, though receding, is still at unacceptably high
level. Interest rates margin is narrowing, though still unacceptably wide. The CBN
has succeeded in expanding both aggregate credit in the economy, as well as
directing single interest rate to MSMEs and households.
However, the exchange rate movements remain worrisome. The demand
pressure in the formal market remains exceedingly high. The challenge is how to
boost foreign exchange supply to the economy. Given the four major sources
of expanding supply: oil exports, foreign capital flows, remittances and non-oil
exports, foreign portfolio investments, while desirable, is however, very fungible.
Oil exports is similarly very volatile. The long-term interests of the country would
be served by encouraging remittances and non-traditional exports. Hence,
suggestions to nationalise remittances will be counterproductive to the
economy in the long term. Nigerians should be encouraged to bring in their
funds into the economy by removing any uncertainty around the ownership and
management of such funds.
The CBN should conduct study to better understand the working of the foreign
exchange market in Nigeria, especially the microeconomic factors driving
economic agents’ behaviour in the market.
In the light of the above, I would like to make the following recommendations:
First, given the limited options open to the Bank to expand foreign exchange
supply in the near term, there is a need to carry out a comprehensive study of
foreign exchange market operations in Nigeria with a view to determining the
fundamental drivers, and relative sizes of the segments of the foreign exchange
market in Nigeria.
In addition, there must also be effective monitoring of the DMBs to close
loopholes for shady practices, collusion, and round tripping. Continuous
communication to market operators on the policy of the Bank and assurances
that customers will continue to have access to their domiciliary accounts is
particularly important to improve transparency and certainty. Furthermore, the
Bank should engage with the Government and the NNPC to find out the reasons
for the non-remittances of any foreign exchange from crude oil and gas exports
for two consecutive months.

Given the fragile growth currently recorded in the economy, and the high
poverty and unemployment rates, CBN must sustain its current intervention
programmes to boost domestic supply and create jobs. The other initiatives of
the Bank in areas like creative industry and reactivation of the Commodity
Exchange are pivotal to increasing employment and reducing poverty,
especially among the youths. In similar vein, the Development Finance
Department should prioritise credit support for exporters.
Moreover, the implementation of the Petroleum Industry Act should help to drive
investment into the petroleum sector. This has the effects of boosting the oil
sector’s contributions to growth. Expanding oil reserves will provide a basis for
OPEC to increase the quota allocated to the country.
The INFRACORP idea proposed by the Banking Committee is a very brilliant
initiative. It will provide alternative source of financing infrastructure
development for the country. This will relieve pressure on government accounts.
There is a need to expedite action on its practical implementation.
Lastly, the insecurity issue must be urgently addressed. This is a major cause of
food price inflation in the country, and the high-risk premium that foreign
investors priced into their investment in the country.

My Vote
In casting my vote in this meeting, I have tried to balance the various risks and
vulnerabilities existing in the economy with a view to doing what is best for the
country at this time. Further tightening of the economy would not be helpful to
growth, employment, and poverty reduction at this time. Loosening would also
not be helpful to sustaining the gain in price stability. Hence, I cast my vote to
maintain all monetary parameters at their extant values:
1) MPR at 14.5%
2) CRR at 27.5%
3) LR at 30%
4) Asymmetry corridor around the MPR at +100/-700 basis points.

3. AHMAD, AISHAH N.
The September MPC meeting opened with positive news on the trajectory of
domestic macroeconomic indicators such as output growth and inflation,
validating the relatively dovish policy stance adopted by the committee in the
past few meetings. Consolidating on these positive developments and driving
a faster post-covid recovery remains paramount – for this reason, I voted to hold
all policy parameters finding no compelling reason in the immediate term to
vary the stance.
Global economic recovery prospects remain strong particularly in advanced
economies with a high rate of COVID-19 vaccination, which has mitigated
fatalities despite rising cases of infections. The IMF in its July update of the World
Economic Outlook confirmed its earlier forecast of 6.0 per cent global growth for
2021 and 4.9 per cent in 2022. Global economic indicators however showed an
uneven recovery across advanced and emerging economies due to
constrained fiscal space, limited availability of vaccines and slow progress in
vaccine administration in emerging markets and developing economies.
Accordingly, 2021 growth projection for advanced economies was revised
upwards to 5.6 per cent from 5.1 per cent, while that of EMDEs was revised
downwards from 6.7 per cent to 6.3 per cent. Concerted efforts at increasing
the availability of COVID-19 vaccines in countries facing resource constraints
alongside substantial monetary and fiscal policy stimulus measures are critical
factors that will ensure more even, sustainable growth in global output.
Inflation rates in key advanced economies have surpassed long-term targets of
many central banks, while food and currency pressures are pushing up prices in
several EMDEs. Whereas the current price developments appear to be transient,
these upward movements are expected to determine future monetary policy
stance. Although US inflation slowed to 5.3 per cent in August 2021 from 5.4 per
cent in July 2021, it is projected to remain high for a while due to persistent supply
constraints. Partly driven by this development, the Fed has given forward
guidance of a likely tapering of its US$120 billion monthly bond purchase
programme later this year. The European Central Bank has also commenced
tapering of its pandemic bond purchase programme whilst the Bank of England
is following suit. The ensuing tightened financial conditions in advanced
economies portends significant macro-economic risk for EMDEs due to their
constricted fiscal space and limited room for monetary maneuvers. Bold policy
initiatives will be crucial to drive strong and sustained recovery in the EMDEs.

Domestic output recovery strengthened further, remaining on a positive
trajectory. NBS data shows that real GDP grew by 5.01 per cent in Q2 2021,
compared with 0.51 and -6.10 per cent in the previous quarter and
corresponding quarter of 2020, respectively. This recovery was attributed to the
non-oil sector, driven by a rebound in services and continued growth in
agriculture sectors – an indication that CBN interventions in the real sector of the
economy are yielding some results.
The manufacturing and non-manufacturing purchasing managers’ indices,
though below 50.0 index points, continued on the upward trajectory both
increasing to 46.9 index points in August 2021, compared with 46.6 and 44.8
index points, respectively, in July 2021. Output growth is expected to further
strengthen in the near term with sustained implementation of fiscal and
monetary stimuli, alongside efforts at increased vaccination to build herd
immunity, contain the pandemic and mitigate its disruptive economic impact.
Domestic prices remained on the path of decline as headline inflation year-onyear decelerated for the fifth consecutive month to 17.01 per cent in August
2021 from 17.38 per cent in July 2021. The food component of inflation also
decelerated to 20.30 per cent in August 2021 from 21.03 per cent in July 2021,
while core inflation declined to 13.41 per cent from 13.72 per cent over the same
period. Staff forecasts indicate a continued downward trend in domestic prices
as monetary and fiscal efforts move to increase output, whilst structural factors
driving domestic price developments such as security, infrastructure, and
logistics arrangements are addressed.
External sector trends improved as reflected in the balance of trade position
which narrowed by 52.56 per cent to a deficit of N1,870.77billion in Q2 2021,
down from a deficit of N3,943.45 billion in Q1 2021, driven by a 74.72 per cent rise
in exports which outstripped increase in imports of 1.45 per cent. External
reserves increased by 7.41 per cent to US$35.97billion at end-August 2021, up
from US$33.49 billion at end-July 2021, whilst relative stability was maintained in
the I & E foreign exchange window following sustained implementation of
policies aimed at boosting liquidity and improving supply to meet legitimate
demands for eligible transactions (PTA/BTA, school fees, medical, etc.). The Bank
is encouraged to sustain the implementation of measures focused on demand/
supply side management and sanitizing the foreign exchange market in order
to improve FX supply and drive further external sector improvements.
The banking sector remained sound and resilient. Capital adequacy stayed
strong at 15.2 per cent, whilst increase in credit was sustained with a growth of
N3 trillion (15.63 per cent) year on year with increased credit being channeled

to growth enhancing sectors. DMBs’ liquidity profile marginally improved,
increasing from 41.3 per cent to 41.7 per cent, which is above the 30 per cent
regulatory benchmark, whilst the Bank continued to use Cash Reserve
Requirement balances to provide liquidity backstops to banks as the need
arose. Non-performing loans ratio declined further to 5.4 per cent in July 2021
from 5.7 per cent in the previous month reflecting strong industry risk
management practices. The Nigerian payment system also retained its
operational resilience effectively accommodating increased volume and value
of transactions as more customers migrate to digital banking channels. The CBN
must, however, remain vigilant and proactively manage risks to financial system
stability from global and domestic macroeconomic developments.
Overall, the macro-economic outlook is positive while financial stability risks are
well managed. The following additional policy measures soon to be launched
by the Bank will further improve macro-economic prospects:
• The revitalization of Nigeria Commodity Exchange (NCX), Nigeria’s
premier commodity exchange, will enhance price discovery, boost
trade in agricultural commodities and promote overall investment into
the agriculture sector.
• The development of the Lagos Creative and Entertainment Center and
renovation of the National Art Theatre will boost Nigeria’s burgeoning IT
and creative sectors and position it to increase its contribution to GDP.
• Nigeria’s Central Bank Digital Currency, e-Naira will improve monetary
policy effectiveness, improve payment system resilience, and drive
financial inclusion, a key enabler for overall economic growth.
• The establishment of Infracorp. Plc with will assist in closing the
infrastructure gap and catalyze growth in key sectors of the economy
• The Nigerian International Financial Centre, (NIFC) will act as an
international gateway for capital and investments inflow into the country
to complement all other initiatives aimed at ramping up economic
growth.

Policy Decision
Whilst acknowledging the improvements in monetary and financial stability
indicators, there is a compelling need to adopt a policy stance that builds on
the current growth momentum.
The reduction in inflation and improvement in domestic output validates the
strategy to maintain the policy stance taken at previous MPC meetings to
support output growth whilst structural and supply side bottlenecks are

addressed Whereas it is important that the Committee keeps an eye on
domestic price developments in line with its primary price stability mandate,
sustaining the post-Covid recovery – particularly as prices continue to abate -
remains a pressing consideration for the Committee.
Adjusting policy parameters now may truncate the positive trajectory of key
macroeconomic indicators. Reducing the MPR may exert inflationary pressures
and reverse the downward trend of prices expected in the short to medium
term. On the other hand, increasing the policy rate to rein in inflation may stall
output growth with significant adverse economic consequences. Sustained
implementation of the CBN’s interventions in the agriculture and manufacturing
sectors aimed at boosting output will further address supply side constraints and
put downward pressure on inflation. Ongoing efforts of the fiscal authorities to
address security and other structural issues (transport, logistics and infrastructure)
will complement these efforts.

In view of the above, I vote to retain all parameters at existing levels;
• MPR at 11.5 per cent
• The Asymmetric corridor of +100/-700 basis points around the MPR
• Liquidity ratio at 30.0 per cent, and
• CRR at 27.5 per cent

4. ALIYU, AHMED
INTERNATIONAL AND DOMESTIC ECONOMIC DEVELOPMENTS
The global economy is steadily recovering from the effects of the COVID-19
pandemic, driven by sustained policy support, significant progress in
vaccinations, and rapid reopening of economies and international trade. The
recovery remains two-track though and continues to rely on the progression in
vaccine distribution and vaccinations. While the Advanced Economies are
approaching full recovery and beginning to prepare for economic
normalization, the Emerging Markets and Developing Economies (EMDEs) still
face macroeconomic challenges. As a result, the IMF in its July 2021 World
Economic Outlook (WEO), retained its global growth projection at 6.0 percent,
revised growth forecasts upward for the Advanced Economies to 5.6 percent
from 5.1 percent, and downgraded its predictions for EMDEs to 6.3 percent from
6.7 percent. This reflects the uneven pace of global recovery. Overall, global
growth is expected to moderate to 4.9 percent in 2022.
Inflation in Advanced Economies earlier thought to be transitory is now persisting.
For most of the countries, inflation remain elevated on account of steady
recovery in demand amid supply bottlenecks. Following increasing pace of
price development and closure of the output gap, central banks of Advanced
Economies are cautiously observing the trend and may have to delay or opt for
a gradual tapering process with the moderation of prices to their long-run
objective. In some EMDEs, food prices and exchange rate pressure are exerting
upward pressure on prices.
As Advanced Economies approach full-scale recovery and begin to consider
the normalization of monetary policy, there is the risk of a possible redirection of
international capital flows away from EMDEs. The likely impact on economic
growth and macroeconomic stability, requires deliberate policies by EMDEs to
mitigate their adverse effects.
Relatedly, global trade, currently buoyed by merchandise trade, is recovering
faster than expected, after a dismal performance in the second half of 2020. The
IMF projects global trade to rise to 9.7 percent in 2021, moderating to 7.0 percent
in 2022. This optimistic scenario is, however, contingent on the success of extant
policies and multilateral efforts at containing the pandemic, and practical
solutions to the supply chain chaos occasioned by ports congestion, particularly
in the US.

Crude oil prices, propelled by increasing demand as a result of the recovery in
world output and trade have remained upbeat, at about US$70/barrel. Based
on the near to medium term expectation of a robust recovery, oil prices are
projected to increase further. For an oil exporting country like Nigeria, the high
prices, coupled with stable production, would improve the trade balance and
support growth in external reserves, as well as the implementation of the 2021
Federal Government Budget, premised on an oil benchmark of US$40/barrel.
The accumulation of both private and public debt is giving way to growing
concerns about debt sustainability and financial crisis in the event of a default.
The Special Drawing Rights (SDR) allocations to countries by the IMF in an effort
to help member countries recover from the pandemic is expected to provide
additional liquidity support to them, improve their external reserves and reduce
their reliance on debt.
THE DOMESTIC ECONOMY
Real Gross Domestic Product grew by 5.01 percent (year-on-year) in Q2 2021,
from 0.51 percent in Q1 2021, indicating three consecutive quarters of positive
growth rates. The development reflects the considerable return of business and
economic activities, supported by monetary and fiscal stimulus to contain the
adverse effects of the COVID-19 pandemic on the economy. However, quarteron-quarter, real GDP grew by -0.79 percent, reflecting slightly slower economic
activity. The non-oil sector at 92.58 percent, contributed the most to real GDP,
compared to the oil sector which contributed a moderate 7.42 percent.
Notable, is the slowdown in the growth rate of the agricultural sector. Agriculture
grew by 1.30 percent in Q2 2021 from 2.28 percent in Q1 2021 and 3.42 percent
in Q4 2020. The sustained decline is worrisome, considering its huge impact on
inflation and employment generation. Ongoing efforts at addressing insecurity
in the country, increasing monetary and fiscal interventions in agriculture, as well
as developing critical infrastructure to support farming i.e., irrigation, drainage,
storage and transportation; are expected to boost the productivity of the sector
in the near to medium term.
The Manufacturing and non-Manufacturing Purchasing Manager’s Indexes
(PMIs), which gauges the level of business activity, at 46.9 index points apiece in
August 2021, improved over the 46.6 and 44.8 index points in July 2021,
respectively, and points to a strong and sustainable recovery.
On price development, headline inflation year-on-year, slowed further to 17.01
percent in August 2021, from 17.38 percent in July 2021. The moderation in
inflation was largely due to a deceleration in the food and core components,

from 21.03 and 13.72 percent, respectively, in July 2021 to 20.30 and 13.41
percent, respectively, in August 2021, owing to improvement in the supply chain.
However, on a month-on-month basis, headline and food inflation rose to 1.02
and 1.06 percent in August 2021 from 0.93 and 0.86 percent in July 2021,
respectively, while core inflation slowed to 0.77 percent in August 2021 from 1.06
percent in July 2021. With the rapid return of economic activities, buoyed by
targeted interventions in the real sector to increase output, and the gradual
recovery from the Covid-19 pandemic, I believe that inflation will sustain its
current downward momentum.
On monetary aggregates, Broad Money Supply M3 increased by 5.83 percent
in August 2021, compared to 2.91 percent in July 2021, owing primarily to a 12.35
and 4.30 percent increase in Net Foreign Assets (NFA) and Net Domestic Assets
(NDA), respectively. The growth in Net Domestic Assets reflects the improvement
in aggregate credit net, which grew to 8.14 percent in August 2021, from 5.71
percent in July 2021.
Overall, the Financial Soundness Indicators (FSIs) remain robust. Staff report
shows that Capital Adequacy Ratio (CAR) remained within the regulatory
threshold of 10-15 percent, while Non-Performing Loans (NPLs) are gradually
moderating to the regulatory maximum of 5 percent. Total credit increased by
N3.0 trillion or 15.63 precent, between end-July 2020 and end-July 2021, due
largely to the increase in industry funding base, as well as the CBN’s directive on
Loans to Deposit Ratio (LDR). Also, the declining lending rates, although
marginally, provides some assurance of improvement in lending to the private
sector in the near term.
Capital market performance as measured by the All-Share Index (ASI) and
Market Capitalization (MC) increased by 2.67 and 2.63 percent, respectively, on
September 14, 2021, from their levels on June 30, 2021, reflecting improved
investor sentiments and confidence in the economy. Likewise, gross external
reserves, shored by SDR allocation of US$3.35 billion by the IMF and increase in
third party receipts, rose to US$35.97 billion at end-August 2021.
On fiscal development, the rapid automation and visibility of FGN fiscal
operations would bolster the revenue collection process and translate to
positive revenue generation for the government.
CONSIDERATION FOR VOTING
It is pleasing to note that the V-shape recovery predicted in 2020 crystalised in
Q2 2021 following the significant increase in real GDP to 5.01 percent, year-onyear. The economy has also sustained the growth momentum which

commenced in Q4 2020. It is noteworthy, that quarter-on-quarter real GDP in Q2
2021 performed lower than it did in the previous quarter, indicating that base
effects could have contributed to the leap in the year-on-year growth rate. This
does not however dampen optimism about the future direction of growth in
view of the lag effect of current policies.
The sustained moderation in headline inflation for the fifth consecutive month to
17.01 percent (year-on-year) in August 2021 is commendable. Nevertheless,
inflation remains high at that level and above the central bank’s benchmark
corridor of 6-9 percent. It is salutary that food inflation is declining, including the
core component, which is indicative that the downward price movement may
soon gather strength.
On exchange rate development, I believe the Bank would continue to support
genuine legitimate transactions, as it intensifies effort on demand management,
while continuing its supply management drive to improve the current account
balance, boost foreign exchange supplies and stabilize the foreign exchange
market.
Given the pace of output recovery and inflation deceleration, as well as the
contending needs in the economy, it is appropriate to hold all policy parameters
at their extant levels, as well as place an eye on exogenous factors that may
present upside risks to inflation, such as a possible pass-through from exchange
rate, and insecurity that distorts the supply chain. In the meantime, monetary
and fiscal stimulus should continue to support the growth recovery, more-so, as
the action reinforces the price stability objective.
I, therefore, vote to maintain the status quo by retaining all policy parameters at
their current levels:
• MPR at 11.5 percent
• The asymmetric corridor at +100/-700 basis points around the MPR
• Liquidity ratio at 30.0 percent
• CRR at 27.5 percent

5. ASOGWA, ROBERT CHIKWENDU
Background:
The overall outlook at the time of this September MPC’s meeting seemed in a
much better position than at the MPC meeting in July 2021. Global economic
conditions have really strengthened as more people are now vaccinated with
restrictions largely eased. Eventhough for many poorer countries with little
access to vaccines, the pandemic trajectory remains troublesome, but with
vaccine manufacturing steadily rising, the expectation is that economic
activities will likely gather pace in the remaining parts of 2021 in almost all
countries. Although global growth is improving, it remains uneven as recovery is
at different speeds for different countries. In developed economies, recovery
seems faster with household consumption growing quickly and even some
companies finding it difficult to meet the rapidly rising demand, but for some
developing countries, growth is still fragile. While some central banks have
commenced tightening of monetary policy in response to the emerging
inflationary trends, some are signalling a possible tightening of monetary policy
in the period ahead, yet other countries have continued with an expansionary
monetary policy, essentially prioritising growth.
On the domestic front, recent indicators show a robust economic recovery
during the second quarter of 2021, but the external sector continues to face
some challenges, especially as foreign inflows remain weak, with huge
consequences for government fiscal operations and exchange rate
management. At this MPC September meeting, the focus as before remains on
ensuring that the domestic economy reverts to its pre-pandemic potentials, thus
the consideration of the current and expected macroeconomic developments
at both the global and domestic contexts will be key to policy choices.
Assessment of the Global Economy:
Recovery in global growth continued to gain momentum in the second quarter
of 2021, but the strength still diverges across regions and countries with access
to COVID-19 vaccines, relaxation of containment measures and the degree of
policy support emerging as principal factors driving the speed of recovery. CBN
staff report show strong 2021 second quarter output growth in many advanced
and emerging market economies. In USA for instance, GDP expanded by 6.6
percent in the second quarter of 2021, while in the Euro area, it grew by 2.0
percent in the second quarter of 2021 as compared with the contraction of -0.3
percent in the first quarter. In the UK, output grew by 4.8 percent in the second
quarter of 2021 as compared with the contraction of -1.6 percent in the first
quarter. Similarly. 2021 second quarter output expansions were recorded in

several emerging and developing economies including Korea, India, China,
Brazil, South Africa and Egypt, but recovery seems to be weaker in some of these
economies than expected. The global output growth is now forecast at 6.0
percent for 2021 reflecting the strengthening of economic activity, especially
recovery in global trade which has increased rapidly since 2021 up to a level
that is about 5.0 percent higher than the period prior to the pandemic. Overall,
the balance of risks to the global outlook is still tilted to the upside mainly due to
the uncertainty over the path of the Pandemic and the potential risk of
heightened financial market volatility.
The global pro-inflationary risks seem to have persisted with many countries
experiencing price pressures due to supply-demand mismatches, high global
commodity prices and in some cases domestic energy price increases. In the
UK, twelve-month CPI inflation rose from 2.0 percent in July to 3.2 percent in
August 2021. In the euro area, headline inflation also rose to 3.0 percent in
August 2021 from 2.2 percent in July, while core inflation rose to 1.6 percent from
0.7 percent during the same period. The US CPI inflation also remains elevated
in August at 5.3 percent easing slightly from a 13-year high of 5.4 percent in June
and July 2021. Eventhough the increasing global inflationary pressures are
evoking key concerns, there are still strong beliefs that these pressures may
simply be transitory and largely driven by adverse supply side factors.
With the inflation outlook assessed to be skewed to the upside, many central
banks have taken pre-emptive actions in order to ensure stability in the period
ahead. On the basis of this, some central banks have commenced the
tightening of monetary policy. Brazil, Korea, Norway, Sri Lanka all adjusted policy
rates upwards in order to address possible upside pressures on inflation, but in
some other emerging economies as India and Malaysia, policy rates have
remained unchanged despite the slight inflation upticks. The central banks of
major advanced economies have however continued to pursue an
expansionary monetary policy. The Bank of England voted in September to
maintain the policy rate at 0.1 percent with a commitment to continue with its
programme of government bond purchases. Similarly, the European Central
Bank expects to maintain policy rates unchanged in September with the asset
purchase programme continuing at the rate of EUR 20 billion per month. The US
Federal Reserve also at the end of July 2021 meeting held its monetary policy
unchanged, whilst maintaining the net purchases of government securities at
USD 8.0 billion per month. The Bank of Japan also in September kept both its
policy rate and government bond buying commitments unchanged. Other
central banks like Canada, Australia and New Zealand have signalled the
tapering of asset purchase commitments and in some cases have commenced
the reduction or complete discontinuation of such purchases.

Domestic Economic Assessment.
Turning to the Nigerian economy, some key indicators continue to evolve
satisfactorily reflecting modest recovery from the pandemic. GDP increased by
5.01 percent in 2021 quarter 2, compared with 0.51 and 0.11 percent in quarter
one of 2021 and quarter four of 2020 respectively. Growth was primarily driven
by the non-oil sector especially a rebound of the services sector. The agriculture
sector also recovered during the second quarter as compared with the first
quarter. Growth is expected to pick up further in quarter three going by recent
high-frequency data such as the Manufacturing and non-Manufacturing PMIs
and the Index of Industrial Production. In August 2021, both the manufacturing
and non-manufacturing PMIs stood at 46.9 points compared with 46.6 and 44.8
points, respectively in July 2021. This rise indicates sustained demand and a pickup in investment against the backdrop of improved business performance.
Headline inflation (year-on-year) moderated further in August 2021 to 17.01
percent from 17.38 percent in July 2021, with food inflation falling while core
inflation edged up slightly. On a month-on-month basis however, both headline
and food inflation rose to 1.02 and 1.06 percent in August 2021 from 0.93 and
0.86 percent, respectively in July 2021. It is expected that price levels will
continue to fall in the coming months especially as the harvest season starts and
with positive developments around insecurity in the food producing regions.
In the domestic financial market, prices and indicators have also moved in the
right direction since the last MPC meeting in July. The All-Share equity market
index increased by 3.46 percent between end-June 2021 and end-August 2021,
while the market capitalization also increased by 3.41 percent during the same
period. System liquidity remains strong buoyed by the Central Bank’s
conventional and unconventional market operations. Broad money supply (M3)
has continued to expand, growing by 5.83 percent in August 2021 as compared
with 2.91 percent in July 2021, while overall banking system credit to the
economy increased month-on-month by 2.2 percent in August 2021, while on a
year-on-year basis, it increased by 8.62 percent. Interestingly, the interest rate
spread (between maximum lending rate and the weighted average savings
and term deposit rate) declined marginally for the first time in several months,
moving from 25.45 percent in July 2021 to 25.41 percent in August 2021. The
banking sector itself remains stable and resilient, just like the position at the last
MPC meeting despite marginal drops in the profitability indicators. The nonperforming loans ratio for the banking sector decreased further from 5.7 percent
in June 2021 to 5.4 percent in July 2021 with the size of the total banking industry
assets increasing by 15.38 percent, year-on-year between July 2020 and July
2021.

The external and fiscal sectors remain two key risks that confront the domestic
economic outlook. For the external sector which continued to face a multitude
of challenges in recent times, a broad based response is key and may require
some coordinated demand and supply sides management measures. With the
increase in import expenditure outweighing the improvements observed in
earnings from exports, the trade deficit has remained significant in the first half
of 2021, eventhough on a quarter-to-quarter bases, there was some moderation
in the size of the trade deficits in the second quarter of 2021. The limited export
activities and the advancing of post-COVID imports together with some
speculative activities continued to exert undue pressure on the exchange rate
in the domestic market. There is some sort of naira exchange rate stability at the
officially recognised NAFEX or I&E window with a marginal depreciation of 0.22
percent between end-July 2021 and end-August 2021. The path of the Naira
exchange rate remains highly uncertain eventhough the gross external reserves
increased by 8.23 percent between end-August 2021 and end-July 2021. Oil
futures prices now indicate somewhat lower prices ahead, implying a possible
weaker naira in isolation. While the Government continues with measures to
secure foreign financing from several sources in order to reinforce the level of
external reserves in the near future, efforts at containing the anomalies created
by the unrecognised foreign exchange market especially by the BDCs need to
be ramped up. The government should however continue to aggressively
explore options to enhance non debt-creating foreign inflows by strengthening
domestic production and export capacity.
The upside fiscal pressures remain unabated, similar to the position in the
previous MPC meeting. CBN staff report show that the revenue-expenditure gap
widened between January and June 2021. The persisting context of increasing
fiscal deficits amid weak revenue performance and soaring debt levels presents
considerable uncertainty around the future domestic economic outlook. The
pressure on the available government revenue is now much greater than was
assumed in the July MPC meeting and urgent expenditure related reforms,
especially on the non-salary recurrent side will help to minimise the borrowing
needs. Such fiscal adjustment measures premised on fiscal discipline will help
achieve a sustainable budget balance.
Monetary Policy Decision:
In consideration of the current and expected macroeconomic developments
as highlighted above, it is necessary that the ongoing accommodation stance
with significant monetary stimulus should be continued. The trade-offs facing
monetary policy in terms of a possible inflationary spike are not yet diluted, but
speeding up the return to more normal output levels should remain a key focus.

Generally, domestic economic conditions are starting to normalise, but there is
still a need for an expansionary monetary policy stance whilst the Central Bank
stands ready to respond appropriately as conditions dictate.
I thus voted to:
• Retain the MPR at 11.5 %
• Retain the CRR at 27.5%
• Retain the Asymmetric Corridor at +100/-700 basis points around the MPR
• Retain the Liquidity Ratio at 30.0%

6. OBADAN, MIKE IDIAHI
Uncertainties have continued to pervade the global economy arising from the
mercurial nature of the coronavirus which has been mutating into more virulent
variants. This has caused serious concerns even in countries that have achieved
a high rate of vaccination, for example, Israel, the United States, and some
European countries. In African countries which have experienced low rates of
vaccination, the concerns are even more, especially in those countries, for
example, Nigeria, where the third wave of the virus, in the form of the Delta
variant, among others, is currently raging with notable fatalities in some parts of
the country. There seems to be a global divide in economic recovery and global
growth prospects along the lines of the Advanced Countries which have high
vaccination rates and optimistic recovery prospects, and the Emerging Markets
and Developing Economies (EMDEs) which have low vaccination rates and
weaker recovery and growth prospects. Sharp geographical imbalances in
vaccination have been quite visible. The danger is that slow vaccination rate in
the EMDEs would not only prolong the pandemic, but also enable the evolution
of coronavirus mutants which would eventually spread to countries that are
highly vaccinated, with significant economic and public-health consequences.
Therefore, more policy/financial support is required to help the Emerging Markets
and Developing Economies to increase vaccination and recover from the
negative economic consequences of the pandemic. It is even in the
enlightened self-interest of the advanced countries to support even distribution
of vaccines across the globe. Global economic recovery could be threatened
by uneven distribution of vaccines and the spread of new and more
transmissible variants of the virus. Such a downside scenario could significantly
depress growth in 2021 and in 2022
KEY GLOBAL DEVELOPMENTS
Since the last MPC meeting, developments in the global economy have not
changed much, especially in the spheres of growth prospects, trade,
commodity, financial markets, and policy responses to the effects of the
coronavirus pandemic.
Steady, but uneven, economic recovery across the globe
The global economy is charting a rather robust path of recovery. The recovery
of economic activities has been going on steadily, though unevenly, in different
parts of the world even in the face of resurgence of new variants of the
coronavirus. Inequality in access to vaccines is causing divergence in economic
recovery across the globe. The uneven distribution of vaccines entails risks which
are building up, aggravated by mutating strains of the Covid-19 virus which are

causing concerns to even the vaccinated and preventing herd immunity.
Nevertheless, it seems that many countries have decided to live with the virus
without re-imposing lockdowns while seeking ways to boost vaccination of the
populace and encouraging compliance with the non-pharmaceutical
protocols against the virus.
Consequently, the IMF’s earlier growth projection for the global economy of 6.0
per cent through its World Economic Outlook (WEO) (April, 2021) was upheld in
the July update of the Outlook. But it is expected to moderate to 4.9 percent in
2022. On the other hand, in the Advanced Economies, the 2021 growth
projection was revised upwards to 5.6 percent while it is expected to moderate
to 4.4 percent in 2022. But because of the limited availability of the Covid-19
vaccines in most of the Emerging Market and Developing Economies that are
facing
resource
constraints
and
considerable
public
health
and
macroeconomic challenges, the growth projection of EMDEs was downgraded
to 6.3 percent in 2021 and expected to moderate to 5.2 percent in 2022.
Global trade is rebounding than expected
Global trade in 2021 is rebounding faster than anticipated after falling sharply
during the second half of 2020. Global trade volumes are projected to expand
to 9.0 percent in 2021 and moderate to 7.0 percent in 2022. The recovery in
global trade is being supported by strong monetary and fiscal policy packages
from governments as well as the effective Covid-19 vaccination coverage in the
advanced countries. But the downside risk to global trade is the mutation of new
strains of the coronavirus which, if not effectively checked, could lead to fresh
rounds of international trade and travel restrictions.
Crude oil prices remain strong in the region of US$ 70.00 per barrel
Crude oil markets weakened earlier in August 2021 as the resurgent pandemic
threatened demand in China and the US, prompting the US government to call
on OPEC and its oil producing allies to boost production in an effort to combat
rising gasoline prices. But prices have since recovered as demand remained
strong in the face of downside risks from threats around the resurgence of covid19 infections. Thus, crude oil prices continued an upward trajectory, in the region
of US$70 per barrel in August 2021. For the Bonny Light brand of crude oil, which
is of interest to Nigeria, after hitting a peak of US$75.09 on 25th June, 2021, the
price declined moderately to US$70.02 per barrel on 27th August, 2021. This
compares with US$50.43 per barrel on 4th January, 2021 and a low of US$14.67
per barrel recorded on 27th April 2020. The price of the commodity is currently
above the pre-pandemic level of US$67.20 per barrel recorded on 1st January,
2020.

What has fuelled oil prices is the continued optimism that the current global
vaccination will surmount the Covid-19 pandemic and return economies to
some form of normalcy. Hence, the increasing demand and recovery in the real
economy as economic agents gradually return to their businesses postlockdown. The rising oil prices have broadened the fiscal space of OPEC
member countries. It is not clear the impact that this has had on Nigeria’s
finances and external reserves.
Against the backdrop of uncertainties in the oil market, indications in the oil
futures market are that the price of crude oil will lie between US$69.64 per barrel
and US$68.97 per barrel between October and December 2021, but moderate
to about US$63.77 per barrel at end 2022.
Global debt is at historically high level
This was near record levels and steadily increasing well before the covid-19
pandemic broke out. The sharp fall in economic activities triggered by the
Pandemic and the virus’ containment measures, led to a further rise in global
debt to historic highs across both the advanced and major emerging
economies. Debt as a ratio of world economic output surged by 35 percentage
points to over 355 per cent of GDP. The current upswing is well beyond the rise
seen during the global financial crisis in 2008. This may weigh on growth and raise
sustainability
concerns
across
countries
depending
on
the
structure,
composition and use of debt proceeds.
Fiscal policy support to economic recovery continues along with monetary
accommodation
Financial conditions remain broadly accommodative. Monetary and fiscal
policies continue to support economic recovery and create jobs required to
push the global economy over the brink to full recovery. In the face of recurring
waves of the coronavirus, the advanced countries have implemented
additional stimulus packages. In the US, a US$1.0 trillion infrastructure bill was
passed by the Senate in August 2021 while the European Union is taking further
steps to support the economies of member states with a EUR 750 billion Next
generation EU Recovery package. Also, a look at the policy rates of the central
banks of both the advanced and emerging market economies indicate a
continuing strong trend towards monetary accommodation. However, central
banks across the globe have continued to maintain the delicate balance
between supporting the recovery and mitigating the persistence of increases in
price to avert the upside risks from high inflation.

As the advanced economies move closer to full recovery, discussions on the
normalization of monetary policy are increasingly being held as their central
banks put in place finishing touches to tapering of their bond purchase
programmes. The European Central Bank has commenced tapering of its
coronavirus pandemic bond purchase programme while the US Federal reserve
is likely to taper its US$120.0 billion monthly bond purchase programme at its
November 2021 meeting. Should the Advanced Economy central banks
commence the much-anticipated normalization of monetary policy before the
end of 2021, capital flows to major emerging market economies, may suffer
reversal. Indeed, if the anticipated redirection of global capital flows away from
the EMDEs towards the Advanced Economies takes place, it would increase the
divergence between these groups of economies and consequently, slow down
their recovery.
KEY DEVELOPMENTS IN THE DOMESTIC ECONOMY
The Nigerian economy is no doubt on the path of steady recovery after exiting
a short-lived covid-19-induced recession in the fourth quarter of 2020. However,
strong concerns remain arising from the fact that although the monetary and
fiscal
policy
responses
of
the
government
have
achieved
results,
macroeconomic challenges remain. Hence, complacency cannot be an
option. Rather, it is important to intensify efforts to achieve respectable
economic growth, quarter-on-quarter, tame inflation, which is decelerating
rather sluggishly, and stabilise the exchange rate, among others. Some leading
issues considered are as follows:
i.
Growth has improved year-on year, but it has not reached the level
which indicates steady upward trend, quarter-on-quarter. No doubt,
the quarter 2 growth rate of 5.01 percent is impressive in relation to
the -6.1 percent growth achieved one year earlier, that is in quarter 2,
2020. The improved growth reflects base effect, that is the very low
output heralding recession in that quarter. Considered on quarter-onquarter basis, the growth performance in the two quarters of 2021 is
not impressive. Q2 growth in 2021 actually declined by 0.79 percent in
relation to Q1. Indeed, total real output in Q2 is lower than that in Q1,
while the Q1 output is lower than Q4 2020 output while this growth is
higher than Q2 2020 output. Thus, growth needs to be further
stimulated through accommodating monetary and fiscal measures so
that the CBN projected output growth of 3.93 percent in Q3 and 2.86
percent at the end of 2021 could be realised.

ii.
Headline inflation (year-on-year) has been on the path of
deceleration since April 2021 (5 months), having first declined from

18.17 percent in March to 18.12 percent in April. It moderated further
to 17.01 percent in August, 2021 compared to 17.38 per cent in July
and 17.75 per cent in June. Food inflation, which is a major driver of
the headline inflation, also moderated to 20.30 percent in August,
2021. But both are still uncomfortably high. The headline inflation has
remained significantly above the ceiling of the Central Bank of
Nigeria’s single-digit inflation corridor of 6.0 - 9.0 per cent and the
Bank’s policy rate of 11.5 per cent. Notwithstanding the deceleration,
the rate still provides cause for concern by citizens. Consequently,
easing monetary policy would exacerbate inflation.

iii.
High exchange rate. The I & E rate, year-to-date, depreciated by 4.5
percent to N412.75 as at September 14, 2021 from N394.03 to one US
dollar in January. This has contributed to headline inflation through its
pass-through effects from prices of imported goods and services to
domestic prices. The upward trend of the exchange rate has been a
key driver of the rising inflation. On the other hand, the depreciating
exchange rate reflects low foreign exchange inflows, unsustainable
demand for imports, and uncomfortable external reserves position.

iv.
Fiscal operations of the government, by resulting in escalating fiscal
deficits, have tended to worsen macroeconomic instability. As at
June 2021, the Federal Government’s fiscal operations resulted in an
overall deficit of N4.328 trillion, 61.8 percent higher than the
budgeted amount. The deficit reflects low inflow of government
revenues compared to the expansion in government expenditure. As
at June 2021, Federal Government revenue was about 35 percent
below the budget benchmark for 2021, financed by money and new
borrowings.

v.
Escalating Public Debt. Associated with the fiscal deficits is rising
public debt which absorbs a large proportion of government
revenue. The latest reports indicate that Nigeria’s public debt stock
has shot up to N35.5 trillion, 7.75 percent higher than N32.9 trillion
recorded at the close of 2020. External debt accounted for N13.7
trillion or 38.7 percent. The escalating debt stock has continued to
raise debt sustainability issues, especially in terms of revenue. While
the public debt is sustainable in terms of GDP, it is not sustainable in
terms of revenue which is a much better indicator of burden for now.
Overall debt sustainability is threatened by continued narrow fiscal
space and weak fiscal buffers.

OPINION
The growth rate of the economy is still very low and fragile while the threat to it
from the third wave of coronavirus and insecurity in the country is real. The
economy does not compare with the Advanced Economies which are planning
to normalise their monetary policies. Those economies have achieved near-full
recoveries even with the threat of recurrent waves of coronavirus. The Nigerian
economy is still on the path to full recovery. Therefore, fiscal and monetary policy
support is still very much desired. Specifically:
• CBN should continue to support efforts to vaccinate a sizable proportion
of the Nigerian populace.
• Development finance interventions should be continued with improved
access for those who need the funding ensured.
• Government should be encouraged to undertake a thorough review of
its public expenditure profile to reduce the cost of governance and
minimise fiscal deficits.
• Government should avoid spending all the revenue received from the
current high oil prices. In other words, it should muster the will to save a
part of the earnings.
• Efforts to tame inflation should not be limited to tackling the known
factors – monetary and non-monetary factors including the legacy
structural factors and insecurity. The search light should also be beamed
on the arbitrariness of some manufacturers, middlemen and retailers in
fixing prices. Most of the price increases do not reflect economic
fundamentals. The nefarious role of market associations/unions in
escalating inflation was recently acknowledged by the Ondo State
Government which promptly banned such associations/unions in Ondo
State. Other State Governments should take a cue from that
Government.
• The CBN should continue with administrative measures to taper/control
the effects of monetary expansion on inflation.
• Against the backdrop of relatively improved foreign exchange reserves,
the Bank should consider augmenting supply to the foreign exchange
market while also considering further demand management measures.
• On the exchange rate, the Bank should ignore the call by some
stakeholders that the parallel market rate should guide the appropriate
exchange rate in Nigeria. This suggestion has no basis. That market
constitutes a negligible proportion of the foreign exchange market in
Nigeria. Consequently, it cannot provide guidance on the appropriate
exchange rate in the country. Rather, it is the equilibrium rate, as
empirically determined, that should provide guidance on the
appropriate level of the exchange rate.

• In light of the recent foreign exchange policy measures, effective
monitoring of the foreign exchange activities of the deposit money
banks is of the essence. It will be tragic if the sharp practices of the BDCs
are relocated in the commercial banks.
In sum, the economy is positively, but gradually, responding to government
policies including monetary policies. In view of the subsisting twin problem of
weak growth and high inflation and the policy dilemma posed, neither further
tightening nor loosening of monetary policy is desirable at this time. And so, I
voted to hold the policy parameters at their extant levels below, while the Bank
continues with the implementation of the development finance interventions to
stimulate output and employment, and administrative measures to control
excess liquidity:
Monetary Policy Rate:


11.5 percent
Cash Reserve Requirement:

27.5 percent
Liquidity Ratio:


30.0 percent
Asymmetric Corridor:


+100/-700 percent around the MPR

7. OBIORA, KINGSLEY ISITUA
In light of a modest recovery in economic activity and
moderating inflation and given the monetary policy
actions that we have already taken, I voted to: retain
the Monetary Policy Rate (MPR) at 11.5 per cent, the
Cash Reserve Ratio (CRR) at 27.5 per cent, the Liquidity
Ratio (LR) at 30 per cent and the asymmetric corridor
of +100/-700 basis points around the MPR. I believe this
stance will complement the Bank’s policy measures
aimed at supporting economic activity, ensure
banking system stability and containing inflationary
pressures.
The severe macroeconomic fallouts of the Coronavirus Disease (COVID-19)
continued amid global vaccination. Although there has been a decline in the
global confirmed cases and deaths in recent weeks, the Delta variant continues
to devastate many economies, especially regions with low vaccination
coverage. Since the July MPC meetings, the number of confirmed cases in the
world has increased by 16.4 percent from 195 million to 227 million in September
2021. Similarly, the number of deaths increased by 15.0 percent from 4 million to
4.6 million. Whilst the COVID-19 pandemic continues to spread, the distribution
of vaccines to contain the virus has been frustratingly uneven between
developed and developing countries. Out of 5.86 billion doses of vaccines
administered globally as of 17 September 2021, Africa received only 2 percent.
This slow pace of vaccination would make it extremely difficult for Africa to
achieve the target of 10 percent vaccination coverage set for September and
40 per cent by December 2021, let alone the African Union’s target of 70 percent
in 2022. Therefore, there is a need to urgently address this gap to avoid the
continued spread and mutation of the COVID-19 pandemic.
The crisis of vaccine inequality notwithstanding, the global economy is
projected to remain strong in 2021. Whilst the Global Purchasing Manger’s Index
eased to 54.1 in August from 55.4 points in July 2021, it continued to trend above
the 50 points neutral mark for the fourteenth (14th) consecutive month. The
improved performance was driven by consumer spending, intermediate and
investment goods, manufacturing production, as well as new orders.
Consequently, for the July 2021 World Economic Outlook, the IMF retained its
April 2021 growth forecast of 6.0 per cent for 2021 but with some revisions. Whilst,

the Advanced economies’ projection was revised upwards from 5.3 per cent to
5.6 per cent, the Emerging Markets and Developing Economies (EMDEs) was
revised downwards from 6.7 per cent to 6.3 per cent. These revisions were
because of the differences in the monetary and fiscal policy support and the
vaccination coverage. Overall, the projections are susceptible to the dynamic
path of the COVID-19 pandemic and the different economic challenges
confronting each region.

Following the global trend, the domestic economy sustained its recovery in the
second quarter of 2021, driven by base effects and policy support. Official data
from the National Bureau of Statistics (NBS) showed that Nigeria’s real Gross
Domestic Product (GDP) increased (year-on-year) by 5.01 per cent in the
second quarter of 2021 from 0.51 per cent in the preceding quarter. It is the
strongest growth since the fourth quarter of 2014. The growth performance was
driven by the non-oil sector, which grew by 6.74 per cent as against the Oilsector that contracted by 12.65 per cent. The key sub-sectors that recorded
significant growth in activity include Road transport, Electricity, Gas, Steam and
Air Conditioning Supply, and Rail Transport and Pipelines by 92.38, 78.16 and
53.28 per cent, respectively. Coal Mining, Trade, Metal Ores, and Insurance also
grew by 34.14, 22.49, 21.12 and 15.68 per cent, respectively. However, activity in
Oil Refining, Quarrying and Other Minerals, and Financial Insurance contracted
by 46.78, 12.29 and 4.54 per cent, respectively.

The significant recovery was driven by sustained fiscal stimulus, accommodative
monetary policy of the Central Bank of Nigeria (CBN), and base effects.
Accordingly, the IMF projected economic growth of 2.5 per cent in 2021 from a
contraction of 1.8 per cent in 2020. Also, inflationary pressures continue to
decelerate for the fifth consecutive month. Headline inflation (year-on-year)
moderated further to 17.01 per cent in August from 17.38 per cent in July 2021.
The moderation was due to the decline in food and core components of
inflation. Both decreased to 2.30 and 13.41 per cent in August from 21.03 and
13.72 per cent in July 2021, respectively. Furthermore, external reserves grew by
7.41 per cent (month-on-month) to US$35.97 billion at end-August from US$33.49
billion at end-July 2021. This was largely driven by the Special Drawing Rights
(SDR) allocation of US$3.35 billion by the IMF – a development that will further
sustain the current exchange rate stability at the Investors and Exporters (I&E)
window. In addition, I am convinced the CBN’s digital currency (the e-Naira)
that will be launched in October 2021 will not only accelerate financial inclusion
in the country but also improve foreign exchange availability and accretion to
external reserves by providing Nigerians in diaspora a new and easier option to
send money home. Besides, it will allow the CBN to effectively gain real-time

monetary system information that would assist in monetary policy management
and foster economic growth through digital innovations.

The financial soundness indicators showed that the banking system remain
sound, stable and resilient. The total assets of the industry increased by 15.38 per
cent from N47.58 trillion in July 2020 to N54.90 trillion in July 2021. Consequently,
the gross banking sector credit increased by N6.63 trillion from N15.57 trillion at
the end of December 2020 to N22.20 trillion at the end of July 2021. The
increased credit was recorded in manufacturing, consumer credit, general
commerce, information and communication and agriculture. The credit growth
was driven by the loan-to-deposit ratio (LDR) policy, the extension of regulatory
forbearance and other macroprudential measures. The Capital Adequacy
Ratio (CAR) and the Liquidity Ratio(LR) both stood at 15.2 and 41.7 per cent in
July 2021, above their prudential benchmarks of 15.0 and 30.0 per cent,
respectively. Although the Non-Performing Loans (NPLs) ratio was above the
regulatory benchmark of 5.0 per cent, it has significantly improved from 6.42 per
cent in July 2020 to 5.38 per cent in July 2021, reflecting the case by case review
of regulatory forbearance, the impact of Global Standing Instruction (GSI)
policy, and strengthening of risk management practices in banks. However, the
monthly weighted average for Inter-bank Call and Open Buy Back (OBB) rates
increased from 10.72 and 11.60 per cent in July to 13.45 and 12.97 per cent in
August 2021. This implies a tight banking liquidity condition as part of efforts in
moderating inflationary pressures and safeguarding the banking system stability.


Despite the year-on-year growth rate of 5.01 per cent in Q2 2021, we must remain
vigilant because the recovery is still fragile. While both manufacturing and nonmanufacturing Purchasing Manager’s Indexes (PMIs) appear to be improving,
they are still below the 50 index points at 46.9 apiece. Similarly, headline inflation
has decelerated for the fifth consecutive month, but is still above the implicit
target of 6-9 per cent. With the commencement of the harvest season and the
various interventions by the CBN, I believe the inflation rate will decelerate
towards the Bank’s implicit target in the near term. Furthermore, the CBN in
conjunction with the Federal Government continues to support the critical
sectors of the economy through the various targeted interventions in
households, SMEs, health, agricultural, manufacturing, and ICT. I believe the
impact of these interventions in promoting economic growth and resuscitating
lives and livelihoods are undeniable.

However, given the modest recovery and the long-standing infrastructural
challenges, more action is required to return the economy to a sustained

recovery. That is why I support the current effort by the Central Bank of Nigeria
(CBN), in collaboration with the Africa Finance Corporation (AFC) and the
Nigeria Sovereign Investment Authority (NSIA), to launch the establishment of
Infrastructure Corporation of Nigeria Limited (InfraCorp) during the fourth quarter
of 2021. It is a Public-Private Partnership (PPP) with a seed capital of N1 trillion
from the Promoters, and expected to rise to N15 trillion from local and
international investors. InfraCorp is expected to promote infrastructural
development in transport and logistics, power, telecommunications and
technology, industrial and agricultural infrastructure as well as Social
Infrastructure. This will further support the growth of the non-oil sector, create
more jobs, and accelerate poverty reduction in the country.

We must, therefore, aggressively support these efforts and sustain those policies
already put in place by the Bank targeted at the key sectors of the economy;
whilst also ensuring that inflationary pressures are contained. On this basis, I
voted to:
• Retain the Monetary Policy Rate (MPR) at 11.5 per cent;
• Retain the Cash Reserve Ratio (CRR) at 27.5 per cent;
• Retain the Liquidity Ratio (LR) at 30.0 per cent; and
• Retain the asymmetric corridor at +100/–700 basis points around the
MPR.

8. SANUSI, ALIYU RAFINDADI
1.0
Decision
In today’s meeting, I voted for a hold on all the policy parameters because, as
the data and staff projections show, inflation would continue to decline, while
output recovers in the medium-term. Although the output recovery continues to
be fragile and further easing would support the process, the risk of reversing the
disinflationary process amidst rising exchange market pressure is considerable.
As the global economy continues to recover from the pandemic-induced
economic recession, and as the impact of the domestic monetary and fiscal
stimuli continue to permeate the economy, a hold on all the policy parameters
appears to be the optimal choice.
2.0
Background and Justification
2.1
Global Economic Developments
The growth rebound in Advanced Economies (AEs) is accompanied by rising
inflation, which remain above their long-term target of 2%. World trade,
commodity prices and international oil prices also continued to recover despite
the increasing cases of COVID-19 infection in some countries. These
developments raise the possibility of policy normalization in the Advanced
Economies, thereby threatening capital flow to Emerging Market and
Developing Economies (EMDEs).
The global economy has continued to recover in line with earlier projections,
and is expected to grow at 6% in 2021. The regional growth projections by the
IMF were, however, revised in July 2021 reflecting the higher growth in AEs, which
are now moving towards policy normalization. The forecasts for EMDEs were,
however, revised downwards reflecting the associated impact of their limited
macroeconomic policy responses and access to vaccines due to resource
constraints. Consequently, output in Advanced Economies is now projected to
grow by 5.6% and 4.4% in 2021 and 2022, respectively, on account of the
substantial fiscal and monetary support as well as widespread vaccine
coverage. The EMDEs are expected to grow by 6.3% and 5.2% in 2021 and 2022,
respectively. Output in the US economy has grown (q-on-q) by 6.6% in Q2 2021
and is projected to grow at 5.1% in Q3 2021 and 4% in Q4 2021. In the Eurozone,
output has expanded by 2% (q-on-q) in Q2 2021 compared with 0.3% achieved
in Q1 2021. Similarly, the UK Economy grew by 4.8% in Q2 2021 and is projected
to grow at 2.5% in Q3 2021. In the EMDEs, output in India expanded by 20.1% (qon-q) in Q2 2021. China grew by 1.3% (q-on-q) due to improved market
expectations and rise in production, employment and demand. Output in Brazil

is expected to decline by -0.2% (q-on-q) in Q2 2021 due to resurgence of new
variants of COVID-19. Russia is expected to grow by 1.8% (q-on-q) in Q2 2021.
The strong recovery in global trade is expected to be sustained in 2021 (at 9.7%)
despite the rising cost of shipping. Although the crude oil prices continue to be
on the upward trend on account of strong demand as the global economy
recovers, the market remains uncertain given the gradual rise in the green
economy initiatives, especially as the calls for reduced financing of investments
in fossil fuel grow louder. As at September 14, 2021, the price of OPEC basket
stood at US$ 71.98 per barrel compared with US$65.29 per barrel on May 22, 2021
or US$54.38 per barrel in January 2021.
As a result of the growth rebound, inflation in the Advanced Economies has risen
above its long-term target of 2%, especially in the US and UK. In the US, inflation
was 5.3% in August 2021 compared with 5.4% in July 2021 and is expected to
persist. In the UK, inflation increased from 2.0% in July 2021 to 3.2% in August 2021.
In the Euro area, inflation is expected to rise to 3% from 2.2% in July 2021. In the
EMDEs, price developments during the period were mixed. Between July and
August 2021, inflation decreased in China (1.0% to 0.8%) and Nigeria (17.38% to
17.01%), but increased in Kenya (6.55% to 6.57%), Egypt (5.4% to 5.7%) and
Ghana (9.0% to 9.7%). The rising inflation in the Advanced Economies amidst
output recovery has increased the likelihood of policy normalization in the major
economies. Indeed, the EU has started the tapering of its bond purchase
programme while the Fed is expected to announce the start of normalization
with the tapering of its US$120 billion monthly bond purchase programme in its
November meeting. Interest rate hikes are, however, not expected before the
end of 2022. The impending tightening in the AEs will have significant effects on
capital flows to the EMDEs, including Nigeria, and adversely affect their external
reserves and exchange rates.
2.2
Domestic Economic Developments and their Implications
Domestic output recovery continued to improve in the second quarter of 2021
since exiting the COVID-19 induced recession in the fourth quarter of 2021. The
V-shaped output recovery, however, continued to be fragile. Although the
economy grew (y-o-y) by 5.01% in the second quarter of 2021 according to the
National Bureau of Statistics (NBS), a closer look shows that the high positive
growth rate reflects the based effect of the Q2 2020 output. Indeed, the N16.7
trillion real output recorded in Q2 2021was actually slightly lower than the N16.8
trillion produced in Q2 2021. Although the -0.79% decline in q-on-q real GDP may
largely reflect seasonality, it also highlights the fragility of the recovery. The
positive year-on-year real output growth during the Q2 2021 was driven by the
non-oil sector, which grew by 6.7%, largely due to growth of services (9.27%) and

Agriculture (1.3%), while the Industrial sector contracted by -1.23%, due to
contraction in Mining and Quarrying. The Oil Sector contracted by -12.65% due
to declines in crude production level of Forcados and Escravos crude steams
caused by leaks on the Trans Ramos and Bonga pipelines. Both the
Manufacturing and Non-manufacturing Purchasing Manager’s Indices (PMIs)
marginally improved in August 2021, but were below the 50-point benchmark.
Staff forecasts show that output growth would be 3.33% for the Q3 2021 and
2.86% for the year 2021 if the oil price remains at US$70 per barrel.
As expected, the headline inflation continued to moderate (y-o-y) from 17.8% in
July 2021 to 17.01% in August 2021, driven by the moderation in food inflation,
which declined to 20.3% in August 2021 from 21.03% in July 2021. The decline in
food inflation was driven by food and non-alcoholic beverages. The core
component also decelerated (y-o-y) to 13.41% in August 2021 from 13.72% in July
2021. The deceleration of the Core inflation was driven by moderation in
Transport and Health. Staff forecasts suggest that inflation would moderate to
16.4% in September 2021 and further to 15.3% in October 2021. The upside risks
are the persistent insecurity across the country and high cost of transport driven
by higher PMS and Diesel costs, electricity tariff, and exchange rate passthrough.
Available data showed that in August 2021, broad money, M3, increased by
5.83%, 3.81% below its provisional benchmark of 9.64% for Q3 2021, but higher
than the 2.91% achieved in July 2021. The higher monetary growth relative to the
preceding month was driven by the rise in the Net Foreign Assets (NFA) by
12.35%. Gross credit by the banking system has continued to grow since the
implementation of the LDR policy. Total credit increased by N3 trillion between
end-July 2020 and end-July 2021. Total credit disbursed to the economy, which
stood at N22.2 trillion as at end-July 2021, as a percentage of the GDP grew from
52.05% in Q4 2020 to 62.04% in July 2021. A review of the financial soundness
indicators of the Banking System revealed that the banking industry has
continued to remain resilient. The Non-performing loans (NPLs) ratio further
declined to 5.4% in July 2021 compared with 5.7% in June 2021 and 6.1% in
December 2020 due to the implementation of the GSI policy. Available data
showed that weighted average lending rates continued to decline since
January 2021. Both the maximum lending rates and prime lending rates have
declined to 27.77% and 11.59% in July 2021, respectively, from 29.05% and 11.67%
in June 2021.

3.0
The Basis for My Policy Choice
In today’s meeting, I voted for a hold on all the policy parameters because, as
the data and staff projections showed, inflation would continue to decline, while
output would recover in the medium-term. In choosing a policy stance, I
considered loosening as an optimal option so as to further support the fragile
output recovery, and disinflationary process which could be at the risk of
reversing amidst rising exchange market pressure. I also considered that the
option of tightening to further support the disinflationary process (encourage
capital inflows and ease the foreign exchange market pressure) would risk
hurting the fragile output recovery. A hold on the current policy stance would,
however, allow for the evolution of both inflation and output on their projected
trajectories as the global economy continues to recover, and the impact of the
domestic monetary and fiscal interventions continue to patriate the economy.

Consequently, I voted to:
Retain the MPR at 11.50 per cent;
Retain the CRR at 27.5 per cent;
Retain the Asymmetric corridor at +100/–700 basis points around the MPR; and
Retain Liquidity Ratio at 30.0 per cent.

9. SHONUBI, FOLASHODUN A.
The pressure for policy makers around the world to improve the current sluggish
global economic recovery is at its highest. Even as the mutating virus continues
to pose new challenges, persisting gap in access to vaccines and vaccination
rate between advanced and developing economies, amidst uncontained
spread of the virus in some nations constitute a threat to global growth. The
overwhelming inclination is to continue to focus on measures that leverage the
internal potentials and strength of the domestic economic environment to
achieve sustainable growth.

Global and Domestic Economic Developments
As many nations struggle to ease restrictions imposed to curb spread of Covid19 virus, rising momentum in global trade, amidst sustained monetary and fiscal
stimuli have been the major driver of global growth. Strong output growth in
advanced economies has also been, largely aided by increasing vaccination
coverage and substantial fiscal support, even as inflation continues to rise. In the
emerging and developing economies, sluggish vaccination rate, high trade cost
and rising probability of policy normalization in the advanced economies have
been a drag on growth, leading to downward revision of the region’s growth
projections to 6.3 per cent in 2021. Despite upward revision of growth in
advanced economies to 5.6 per cent, the International Monetary Fund forecast
global growth to remain at 6.0 per cent in 2021.

Domestic economic growth delightfully strengthened further in the second
quarter of 2021 making three consecutive quarters of expansion, post-recession.
The National Bureau of Statistics (NBS) reported GDP growth at 5.01 per cent in
Q2:2021, driven mainly by 6.74 per cent growth in the non-oil sector, against
12.65 per cent contraction in the oil sector. Growth in the service sector was 9.27
per cent, up from 0.39 per cent contraction in the preceding quarter, while
growth in the agricultural sector slowed to 1.30 per cent. The Industry sector also
contracted by 1.23 per cent, due mainly to the dismal performance of the oil
sector.
Headline inflation remained high at 17.01 per cent in August 2021, though
deceleration in inflationary pressure from April 2021 continued for the fifth
consecutive month, as inflation reached its lowest since January 2021. Similarly,
food inflation decelerated further but remained high at 20.30 per cent, on
account of widespread insecurity induced disruptions to food production and
distribution. Exchange rate pass through and rising cost of trade due to persisting
disruptions to global supply chain have also kept prices of imported necessities

and core inflation high at 13.41 per cent in August 2021, slightly down from its
level in the preceding month.
In addition to continually serving as the veritable channel for the Bank’s
intervention, the banking system has remained generally resilient and stable,
with major prudential ratios generally hovering around regulatory benchmarks.
Industry deposit and asset grew further in the review period. Similarly, even as
aggregate credit continues to grow, aided by the LDR policy, industry nonperforming loans improved further to 5.4 per cent, inching closer to the
regulatory minimum of 5.0 per cent. Industry capital adequacy ratio, at 15.2 per
cent, was above the 15.0 per cent threshold.
Growth in major monetary aggregates generally trailed provisional benchmarks
for the fiscal year, except for the net domestic assets which significantly
surpassed the target. Liquidity conditions in the banking system continued to
drive trends in major money market rates. Amidst easing financial condition, the
gradual return of confidence witnessed in recent months in the capital market
was sustained, as the all share index and market capitalization improved further.
Though external reserves increased in August 2021, net-outflow, and reduced
proceeds from petroleum related sources, continued to heighten pressure in the
external sector. In the fiscal sector, revenue remained significantly below the
budget benchmark, despite pressure for increased expenditure to address
widespread insecurity, rising need for social safety net and infrastructural deficit.
Overall Considerations and Decision
Prospect of global growth remains largely dependent on attainment of
increased vaccination, as well as, the ability to sustain the monetary and fiscal
stimuli support. However, widening gap in vaccination rate between advanced
and other economies constitute major headwind, even as increasing mutation
worsened uncertainties around the pandemic, with implications for further
reopening of economies and global trade. This stalling outlook of global growth
and probability of commencement of policy normalization by some advanced
economies are further motivations for refocusing of the domestic policy
trajectory

Despite the positive outcomes so far, the current environment of high inflation,
fragile growth, limited fiscal space and pressured external sector presents a
challenging scenario for policy. However, given the progress in the recent
period, the outlook, though mixed, portends good omen. Continued
deceleration in inflation is a welcome development and testament to the
efficacy of CBN’s measures, especially those directed at enhancing food

production and distribution, easing the supply chain and preserving aggregate
demand. Despite consistent month-on-month expansion in the broad money
supply, its overall sub-benchmark growth diminishes the monetary phenomenon
risk to inflation.

The signs in the real sector are encouraging, especially considering the need to
further strengthen growth across all sectors. With increasing contribution of the
non-oil sector to growth, aided by the Banks’s interventions, the prospects of
further expansion in output remain bright. Third consecutive months of increase
in the Purchasing Mangers’ Index, on account of, higher employment level and
raw material inventory is also a signpost of positive outlook, though higher input
and output prices underscores inflationary expectations. I therefore encourage
the Bank to sustain its interventions for improving credit flow to the productive
sectors, so as to keep output expansion, while also intensifying its effective
demand enhancing stimulus to preserve aggregate demand.
Amidst combination of measures to maintain stability in the foreign exchange
market and mitigate risks to the external sector, improved accretion to external
reserves is a testament that the Bank’s actions are in the right direction. As the
fiscal authority grapple with high debt profile, due to falling revenue and rising
expenditure, I want to restate my earlier calls for the Government to strongly
leverage the public-private partnership model to efficiently close the financing
gap for addressing the infrastructure needs in the economy, while also resolving
widespread insecurity. Hopefully implementation of the Petroleum Industry Act
will facilitate enhancement of the value adding opportunities in the oil sector.
In the light of recent progress from our effort to restore the economy to path of
sustainable growth, the key task is to preserve and, where possible, reinforce the
policies that have delivered the current growth and deceleration in inflationary
pressure.
I therefore voted to retain the:
• MPR at 11.50 per cent;
• Asymmetric corridor of +100/-700 basis points around the MPR
• Cash Reserve Ratio (CRR) at 27.5 per cent; and
• Liquidity Ratio at 30.0 per cent.

10. EMEFIELE, GODWIN I.
GOVERNOR OF THE CENTRAL BANK OF NIGERIA AND CHAIRMAN, MONETARY
POLICY COMMITTEE
With robust recovery in the first two quarters of 2021, global economic outlook
remains strong; yet, uneven across regions. Further dismantling of covid-19
restrictions in many countries, boosted by the progress in vaccine administration
and increased cross-country trade, continued to rebound economic activities
towards pre-pandemic trends. In addition, growth momentum was ubiquitously
reinforced by sizeable fiscal and monetary stimuli. Global growth for 2021 is
projected, by the IMF, at 6.0 percent, even as the race between vaccine rollout
and new variants of the virus persists. With growth projections upgraded to 5.6
percent from a previous 5.1 percent, GDP in some advanced economies could
surpass pre-pandemic levels by end-2021. However, sluggish vaccine
distribution debilitated growth projection for emerging markets and developing
economies to 6.3 percent from 6.7 percent.
Outlook of the domestic economy continued to brighten amidst favourable
year-to-date outcomes of key economic metrics. The upturn in domestic
economic activities derived from the coordinated fiscal and monetary support
for households and businesses, to curtail the adverse shocks from covid-19. At
5.01 per cent, GDP recorded a better-than-forecast growth rate in 2021q2 from
0.51 percent in 2021q1. This was mainly driven by the non-oil sector which grew
by 6.74 percent from 0.79 percent as services rebound from a contraction of -
0.39 percent to a growth of 9.27 percent. The resilient 1.30 percent growth of
the agriculture sector reinforced the recovery. With this, the non-oil sector
contributed 6.09 percent to overall growth rate while the balance of -1.08
percent was derived from the oil sector which recorded a deeper contraction
of -12.65 percent from -2.21 percent in 2021q1. The performance of the
domestic economy largely reflected the continued upside impact of the
various real sector interventions of the CBN.
Near-term outlook remained buoyant given the continued consolidation of
manufacturing and non-manufacturing PMIs in August 2021 to 46.9 index points
apiece, indicative of strengthening domestic conditions. For the entire 2021, the
Nigerian economy is projected to expand by 2.5–3.0 percent vis-à-vis the -1.92
contraction in 2020. The upturn of domestic economic activities is progressive
towards pre-pandemic levels and historical average on the backdrop of
resilient non-oil activities (especially agriculture sector). As business sentiments
brighten, following our various supply-side stimulus and orderly implementation
of macroeconomic policies, l expect domestic fragility to continue to dissipate

with favourable knock-on effects on job creation and poverty alleviation. Our
medium-term goal is to fast-track growth rates above historical levels, raise per
capita income (as GDP outpaces population growth rate), and achieve singledigit inflation rate as we actively collaborate with fiscal authorities to stimulate
high-impact productive sectors.
Headline inflation slowed for the fifth consecutive month to 17.01 percent in
August 2021 from 17.38 percent in July. This reflected the disinflation in both the
food and core components of inflation. Food inflation moderated by 0.73
percentage points to 20.30 percent while core inflation fell by 0.31 percentage
point during the month. Yet, inflation remained outside the CBN tolerance
range of 6–9 percent, due to supply-side constraints including infrastructure
deficits, energy prices, exchange market pressures and lingering insecurity.
Short-term inflation expectations are traversing downward as our development
financing gradually resolve supply rigidities. I note that the newly created
InfraCorp, by rousing vital infrastructure investments, will narrow the existing
infrastructure gap and lower the long-run trend of inflation.
Monetary condition was relatively tight during the review period, compared
with a bullish capital market. Weighted average inter-bank call and open-buyback rates rose from 10.72 and 11.60 percent, respectively, in July 2021 to 13.45
and 12.97 percent in August. Though monetary aggregates expanded in
August, they were largely below provisional benchmarks. The 5.83 percent
growth in broad money supply was 3.81 percentage points below target. At
12.35 percent, the growth in net foreign assets was below the targeted 32.79
percent while net domestic assets expanded by 4.30 percent, reflecting the
17.45 percent growth in private sector credits. With the introduction of the LDR
policy, gross credit increased from N15.57 trillion in May 2019 to N22.20 trillion in
July 2021. Amidst rising credits, the banking system remained pleasingly stable
and resilient. Capital adequacy ratio and liquidity ratio, at 15.2 and 41.7
percent, respectively, stayed above the prudential limits, while Non-Performing
Loans (NPL) ratio, at 5.4 percent, continued to fall towards target.
In my consideration, I noted that the domestic economy continues to recover
towards pre-pandemic levels. Output growth rebound in 2021q2 was satisfying,
although GDP remained slightly below potential. Price developments is also
unravelling favourably with five consecutive months of disinflation. These
positive developments notwithstanding, economic dynamics remain fragile
and threatened by covid-19 related drawbacks, especially in the race
between vaccination and new virus strains. Uncertainty around crude oil
developments, frail investor sentiment and lingering security challenges

increase the vulnerability of the domestic economy to further shocks. Yet, I note
that whilst short-term domestic outlook is improving, it is imperative to sustain the
orderly and coordinated policy actions in order to strengthen economic
fundamentals. Currently, inflation remains higher-than-desired and needs to be
curbed. But we also need to strengthen GDP (per capita) growth in order to
boost the welfare of the Nigerian economy and reduce poverty and
unemployment. I, again, recognise the underlying trade-off between GDP and
inflation as I continue to favour measures to boost domestic supply capacity
and dismantle immanent structural bottlenecks.
The growth and inflation considerations remain a policy dilemma. Today, I
maintain my cautious optimism and unwillingness to jolt the current trajectories
of either growth or inflation. I adjudged that whereas accelerated disinflation
and growth were desirable, the balance of evidence indicated that both were
currently moving in the ideal direction and could attain the required levels in
due course. I emphasise that the mandate of price stability remains inviolable,
but not at the cost of adverse policy shocks to the real economy. A policy
change today may cause indeterminate outcomes and derail the nascent
recovery. I maintain my inclination towards a balanced and cautious decision
to maintain the current policy stance and avoid policy-induced shocks.
Therefore, I vote to:
1. Retain the MPR at 11.5 percent;
2. Retain the asymmetric corridor at +100/–700 basis points around the MPR;
3. Retain the CRR at 27.5 percent; and
4. Retain liquidity ratio at 30.0 percent
GODWIN I. EMEFIELE, CON
Governor

September 2021