CENTRAL BANK OF NIGERIA COMMUNIQUÉ NO 119 OF THE MONETARY POLICY
COMMITTEE MEETING OF JULY 23 AND 24, 2018, WITH PERSONAL STATEMENTS
OF MEMBERS

1.0
Background
The Monetary Policy Committee (MPC) held its 262nd meeting on Monday,
23rd and Tuesday, 24th July, 2018 amid fragile improvements in global growth
and
the
domestic
economic
recovery.
The
Committee
reviewed
developments in the global and domestic economic and financial
environments, as well as the outlook for the rest of the year. The MPC also
assessed the risks to price stability, credit growth, employment creation and
financial system stability, in the short-to-medium term. Ten (10) members of
the Committee were in attendance.
Global Economic Developments
Global growth momentum remained promising despite rising trade tensions,
uncertainties in BREXIT negotiations and scepticism over North Korea’s
commitment to the denuclearise the Korean Peninsula. Global growth was
projected at 3.9 per cent in 2018, compared with 3.7 per cent in 2017, largely
driven by the recovery in oil prices, rising asset prices and long term yield on

major financial markets as well as a rebound in investment, manufacturing
output and trade.
In the Advanced Economies, growth was projected at 2.4 per cent in 2018,
the same as in 2017. The growth was expected to be driven majorly by fiscal
stimulus in the United States coupled with accommodative financial
conditions. In the Emerging Markets and Developing Economies output
growth was projected at 4.9 per cent in 2018, up from 4.7 per cent in 2017,
due largely to sustained recovery in global commodity prices (particularly
crude oil); rebound in investment, manufacturing and trade as well as the
strengthening of domestic consumption.
The downside risks to global output growth remains the build-up in financial
vulnerabilities; rising costs of borrowing in the Emerging Markets and
Developing Economies; fragile corporate balance sheets; escalating trade
protectionism, uncertainties around the BREXIT negotiations; heightened
geopolitical tensions; and fiscal sustainability concerns.
Global inflation was projected at 3.2 per cent in 2018, driven by rising energy
prices, and currency depreciations in some emerging market and
developing economies. In the advanced economies, inflation was projected
to increase to 2.2 per cent in 2018, up from 1.7 per cent in 2017, as a result of
increases in the cost of transport, housing, energy and food. Similarly, inflation
in the emerging markets and developing economies is projected to rise from
4.0 per cent in 2017 to 4.4 per cent in 2018, due to currency depreciations
and rising energy prices. The Committee believes that global inflation is likely

to remain subdued over the medium term relative to long term trends despite
subsisting monetary accommodation in some advanced economies.
Domestic Output Developments
Economic recovery was sustained with a positive outlook over the mediumterm, anchored on oil price recovery, fiscal spending and stability in the
foreign exchange market. Data from the National Bureau of Statistics (NBS)
showed that real Gross Domestic Product (GDP) grew by 1.95 per cent in the
first quarter of 2018, compared with 2.11 per cent and a contraction of 0.91
per cent in the preceding and corresponding quarters of 2017, respectively.
The oil sector, which contributed 1.26 per cent in Q1 2018, compared with
0.76 per cent during Q4 2017 was the major source of the growth. The
Purchasing
Managers
Indices
(PMI)
for
manufacturing,
and
nonmanufacturing activities rose for the fifteenth and fourteenth consecutive
months to 57.0 and 57.5 index points, respectively, in June 2018. The
Committee noted the positive impact of the sustained improvement in
foreign exchange supply on the performance of manufacturing and other
key sectors of the economy. The Committee welcomed the positive
economic growth, but observed that the recovery was still fragile and called
for the speedy implementation of the 2018 Federal Government Budget and
the Economic Recovery and Growth Plan (ERGP) to strengthen output
growth in the Nigerian economy.

Developments in Money and Prices
The Committee observed that Narrow money (M1), contracted by 4.25 per
cent, annualised to -8.49 per cent, relative to the provisional benchmark of
8.04 per cent. Broad money supply (M2), however, grew by 2.79 per cent in
June 2018, annualised to 5.58 per cent, compared with the provisional
growth benchmark of 10.84 per cent for fiscal 2018. The increase in M2 was
mainly driven by Net Foreign Assets (NFA), which grew by 18.15 per cent in
June 2018, annualised to 36.30 per cent, compared with the provisional
benchmark of 18.15 per cent for 2018. The development reflected
improvements in foreign receipts arising from favourable crude oil prices. On
the other hand, Net Domestic Credit (NDC) contracted by 1.40 per cent,
annualized to -2.80 per cent, compared with the provisional benchmark of
12.45 per cent. The development was driven largely by the decrease in net
credit to government, which contracted by 9.74 per cent in June 2018,
annualised to -19.48 per cent against the provisional benchmark of 54.97 per
cent. Credit to the private sector similarly contracted by 0.04 per cent,
annualised to -0.08 per cent in June 2018, in contrast to the provisional annual
benchmark of 5.64 per cent.
A revised and seasonally adjusted money supply aggregate, however,
showed an uptick. The new aggregate (M3), which is still being finalised by
the Bank, appears to comprehensively capture the liquidity in and outside
the banking system, compared with the existing M2. More details about the

impact of M3 on macroeconomic variables would be reviewed at future
MPC meetings.
Headline inflation (year-on-year) trended downwards for the seventeenth
consecutive month to 11.23 per cent in June 2018 from 11.61 per cent in May
2018. Food and Core inflation also fell to 12.98 and 10.40 per cent, from 13.45
and 10.71 per cent, respectively, over the same period. The Committee,
however, noted the rise in the month-on-month inflation rate, to 1.24 per cent
in June, from 1.09 per cent in May 2018. Food inflation (month-on-month) also
increased from 1.33 per cent in May to 1.57 per cent in June 2018,
representing an increase of 0.24 percentage point. During the same period,
core inflation (month-on-month) also rose by 0.05 percentage point, from
0.98 per cent in May to 1.03 per cent, in June 2018. In view of the trend in
rising month-on-month inflation rate, amid the slowly declining year-on-year
headline inflation, indications were that inflationary pressures are rebuilding in
the domestic economy.
The review of developments in the money market revealed that the average
inter-bank call rate fell to 5.0 per cent in June 2018, from 25.43 per cent in
May 2018, while the average Open Buy Back (OBB) rate decreased from
18.37 per cent in May 2018 to 10.84 per cent in June 2018. The trend in market
rates and the net liquidity position reflected the impact of the auction of
Open Market Operations (OMO) bills, foreign exchange interventions, FAAC
allocations to various levels of government, as well as the servicing of
maturing CBN Bills.

External reserves stood at US$47.2 billion on July 23, 2018. The Committee was
optimistic and expected further increases in the level of external reserves in
the near term, citing the favourable crude oil prices. The Committee,
therefore, advised the Bank to sustain its current efforts to maintain investor
confidence and ensure accretion to external reserves. The MPC also called
on the Federal Government to continue to build fiscal buffers against possible
oil price shocks in the future. Noting that the rise in the monthly distribution of
revenues at the FAAC portend the danger of the absence of reserve buffers
to absorb shocks in the future.
The All-Share Index (ASI) increased marginally by 0.09 per cent to 38,278.55
on June 29, 2018, from 38,243.19 at end-December 2017. Market
Capitalisation (MC) also increased by 1.89 per cent to N13.87 trillion on June
29, 2018, from N13.61 trillion at end-December 2017. However, ASI and MC fell
by 7.24 per cent, respectively, on June 29, 2018 compared with the level at
end-April 2018, due majorly to profit taking activities of investors, and the
effect of monetary policy normalization in the United States. The Committee
noted with satisfaction, the relative stability in the foreign exchange market
and high level of activities, particularly, at the Investors’ and Exporters’ (I&E)
window.
The Committee noted the commencement of the currency swap deal with
the People’s Bank of China (PBoC) and observed that the availability of
Renminbi currency to Nigerian investors would ease pressure in the foreign
exchange market. The MPC called for speedy implementation of the

framework of the currency swap and urged the Bank to carry out sensitization
programme for the public.
2.0. The Overall Outlook and Risks to the Domestic Economy
The forecasts of key macroeconomic indicators point to positive economic
growth in the second half of 2018. The expectation is premised on the
implementation of the 2018 budget, sustained stability in the foreign
exchange market, as well as increase in crude oil production and prices. The
MPC, cautioned that the downside risks to the growth outlook include:
continuing delay in the implementation of the 2018 budget; worsening
farmer-herdsmen conflicts in some parts of the country; continued nonpayment of workers’ salaries and pensions in some states; rising sovereign
debt, as well as uncertainties surrounding the direction of trade, including the
external demand for Nigeria’s oil.
Inflation forecast for the near term points to further moderation in price level
in the short term. However, the downside risks to inflation include: the impact
of excess liquidity that could arise from the implementation of the approved
N9.12 trillion 2018 FGN budget; pre-election spending; anticipated review of
salaries and wages; security challenges; and monthly FAAC injections.
Although these could boost aggregate demand, it would equally exert
upward pressure on domestic prices for the rest of the year. The Committee,
therefore, called for a co-ordinated fiscal, monetary and exchange rate
policies to stem the upward build-up in price pressures.

The Committee observed that rates in the foreign exchange market have
remained relatively stable in near term, supported by continued intervention
in the market by the Bank, sustained increase in the price of crude oil in the
international market, as well as positive developments in the external sector.
3.0. The Considerations of the Committee
The MPC noted with satisfaction the fourth consecutive quarters of growth in
real GDP and the positive growth outlook in the domestic economy. This is
shown by the sustained improvement in the Manufacturing and Nonmanufacturing Purchasing Managers’ indices in the second quarter of the
year. The MPC commended the approval of 2018 Federal Government
budget and called for an accelerated implementation to further support the
fragile growth
recovery. The
Committee
also
called
for
sustained
implementation of the Economic Recovery and Growth Plan (ERGP) to
further stimulate output growth. The Committee was, however, concerned
about the liquidity impact of the 2018 expansionary fiscal budget and
increasing FAAC distribution, arising from rising prices of crude oil as well as
the build-up in election related spending.
Notwithstanding, the positive direction of the outlook, the MPC reviewed the
effects of the sustained monetary policy normalization in the US with
implications for capital flow reversals, exchange rate and domestic price
pressures, as well as other challenges to growth during the second half of
2018.

The Committee took note of the sustained moderation in inflationary
pressures, especially headline inflation, as well as stability in the foreign
exchange market, but expressed concern on the threat posed by incessant
herdsmen-farmers crisis in some key food producing states and the negative
impact on food supply chains which would continue to exert upward
pressure on food prices. The Committee, therefore, called on the Bank to
continue to build on the progress already made to sustain the moderation in
inflation.
The MPC also observed with satisfaction high level of activities in the
Investors’ and Exporters’ (I&E) window of the foreign exchange market which
continued to supply liquidity in foreign exchange market, narrow exchange
rate premium, and reduce speculative activities in the market.
The MPC noted the continued improvements in the performance of deposit
money banks and expressed optimism that the moderation in the levels of
non-performing loans in the industry would continue. The Committee,
therefore, called on the Federal Government to accelerate the settlement of
outstanding contractor debts and also encourage the Bank to ensure strict
compliance prudential guidelines.
In discussing the economic report presented to the members, it was observed
that as the prices of crude oil rose in 2017 and 2018, the monthly allocation to
various levels of government also increased, suggesting that the Federal
Government may not be saving adequately for the future. The Committee,

therefore, advised the fiscal authority to build-up buffers, especially now that
the price of crude oil is relatively high.
4.0. The Committee’s Decisions
Informed by the developments in the global and domestic economic and
financial environments, the Committee painstakingly reviewed the policy
options available. In particular, the Committee considered the sustained
positive growth in real GDP over the last quarter, stability in the foreign
exchange market and high level of accretion to the external reserves.
The MPC deliberated on the rise in food inflation, impact of the expected
liquidity from expansionary 2018 FGN budget and rising FAAC disbursement in
the second half of the year along with the build-up in pre-election year
spending. The Committee strongly considered the option of tightening
believing that tightening would curtail the threat of a rise in inflation, even as
the injection from the fiscal authorities would still provide the economy with
substantial liquidity. Notwithstanding the deceleration in headline inflation,
the current double digit inflation rate remains above the Bank’s 6-9 per cent
target range. In addition, the Committee was of the view that tightening
would help stem the tide of capital flow reversals in the face of sustained
monetary policy normalization in the US. This, the Committee believed would
rein-in inflationary pressure and moderate inflation rate to single digit,
increase real interest rate, build investor confidence with attendant positive
impact on capital inflows and further stabilize the country’s exchange rate.

On the contrary, the Committee was of the view that raising interest rate at
this time would weaken consumption and raise the cost of borrowing to
investors in the domestic economy. In addition, the policy would trigger the
re-pricing of financial assets by deposit money banks, thus further constrict
credit to the real sector, and that would promote non-inclusive growth.
In considering the option of loosening, the Committee assessed the potential
effects of stimulating aggregate demand through lower cost of capital. This
could stimulate consumption and aggregate demand. The Committee,
however, considered its potential relevance, taking into account the
expected liquidity injections from the 2018 budget, increased FAAC
disbursements and election related spending ahead of the 2019 general
elections. If these crystalize, it would exacerbate inflationary and exchange
rate pressures as well as return the real interest rate into negative trajectory.
Moreover, lowering the policy rate may not translate to an automatic
reduction in market rates due to poor transmission mechanism owing to
structural rigidities. The Committee was also of the view that loosening could
reverse the gains already made on reduced importation which has
strengthened the current account balance. It would also lower banks risk
appetite and possible rise in NPLs which could negatively impact on the
banking industry stability.
In the discussion for a hold, it was noted that risks to the macroeconomic and
financial environment appears fairly balanced with improvements in output
growth and inflation. Holding policy at the current stance would support

growth and further moderate inflation. The Committee, however, noted the
preference of the public for loosening, concerns that the MPC had held the
MPR at 14 per cent since July 2016 and also considering the dynamic nature
of the market, the MPR may have lost its signalling effect to the market. The
argument in favour of maintaining the current policy stance is to monitor the
magnitude of the liquidity impact of the fiscal injections and election-related
expenditure ahead of the 2019 general elections.
Overall, the MPC was of the opinion that, while it is difficult to encourage job
creation in an environment with deficit infrastructure, the Committee believes
that the Bank should continue to encourage deposit money banks (DMBs) to
increase the flow of credit to the real economy to consolidate economic
recovery. In this regard, the Committee believed that a heterodox approach
to reform the market in order to strengthen the flow of credit would be
appropriate at this time. Consequently, credit constrained businesses,
particularly the large corporations are encouraged to issue commercial
paper to meet their credit needs and the Central Bank of Nigeria may, if
need be, buy those instruments to complement the efforts of the DMBs. In
addition, as a way of incentivise deposit money banks to increase lending to
the manufacturing and agriculture sectors, a differentiated dynamic cash
reserves requirement (CRR) regime would be implemented, to direct cheap
long term bank credit at 9 per cent, with a minimum tenor of seven (7) years
and two (2) years moratorium to employment elastic sectors of the Nigerian
economy. Details of this framework are being worked out by the Banking

Supervision, Monetary Policy and Research Departments of the Bank and
would be released soon.
In consideration of the foregoing, therefore, the Committee decided by a
vote of Seven (7) members to retain the Monetary Policy Rate (MPR) at 14.00
per cent alongside all other policy parameters. Two (2) members, however,
voted to increase the MPR by 50 basis points, while one (1) member voted to
increase the MPR by 25 basis points.
Consequently, the MPC voted to retain the:
(i) MPR at 14.0 per cent;
(ii) CRR at 22.5 per cent;
(iii) Liquidity Ratio at 30.0 per cent; and
(iv) Asymmetric corridor at +200 and -500 basis points around the MPR.

Thank you for listening.
Godwin I. Emefiele
Governor, Central Bank of Nigeria
24th July, 2018

PERSONAL STATEMENTS BY THE MONETARY POLICY COMMITTEE MEMBERS
1.
ADAMU, EDWARD LAMETEK
Very much like the two previous meetings (April and May) the July 2018
meeting of the Monetary Policy Committee (MPC) held against the
backdrop of improvements in key (domestic) economic and financial
system indicators relative to 2017. On the global front, geopolitical tensions
and trade issues have remained, even as the outlook for global output
growth continues to be largely positive. However, the outlook for domestic
economic conditions going into 2019 is laden with uncertainties around
liquidity and capital flows, among others.
As I evaluated the available data and forecasts, I noted especially, the
fragile nature of the gains in the current macroeconomic and financial
outcomes. This essentially strengthened my persuasion on the need for more
reforms in the country’s fiscal and financial systems to deal with persistent
liquidity threats and ensure better credit intermediation, respectively.
Whereas measures by the Bank continue to be relevant stop gap, those
alone would not permanently solve the fundamental structural impediments
to lasting economic stability. Infrastructure continues to be a key imperative
towards easing some of the constraints on credit delivery and growth in the
economy.
Mindful of the extant threats to the relative stability seen year-to-date, which
I will further explain, I figured that monetary policy needed to continue in the
restrictive mode. The pace of deceleration in year-on-year inflation
continued to slow in June 2018. Meanwhile, the month-on-month indices did
not only rise but did so much faster than observed during the previous
month. Specifically, the headline index rose by 1.64 per cent; core index rose
by 1.03 per cent and food index increased by 1.57 per cent, from 1.09, 0.98
and 1.33 per cent respectively in May. A critical element of the disinflation
effort of the Committee has been price expectation management. The

restrictive stance of policy has, to a large extent, helped to lock-in inflation
expectation and should be preserved in the face of the threat posed by the
likely liquidity injections in the rest of the year.
While demand management remains a useful approach to curbing price
pressures in the short-term, it necessarily cannot be depended upon alone
to achieve long-term stability. Ultimately, supply constraints will have to be
removed or substantially ameliorated to ensure enduring price stability. This is
the case with not only consumer prices but also the exchange rate. And so,
in considering policy options for managing the risks to inflation and the naira
exchange rate, I saw (as always) the need to factor-in economic growth
and employment concerns. In the absence of firm real GDP data for Q2,
2018, indications from the Purchasing Managers’ Indices (PMIs) came quite
handy. Both manufacturing and non-manufacturing PMIs, at 57.0 and 57.5,
respectively for June, showed some prospects of output expansion, which
should be sustained and possibly strengthened in the interest of jobs and
poverty reduction.
On the financial side, the numbers suggest that markets are reacting as
expected to relevant developments. Bond yields and interest rates are
declining albeit slowly, partly reflecting the deceleration in inflation and
market sentiment. Likewise, money market interest rates (interbank, prime
and maximum lending rates) all moderated in June reflecting in part easing
monetary conditions. Slowing portfolio inflows (and rising outflows) on the
heels of policy normalization in the advanced economies, strengthening US
dollar and election-related anxieties continue to engender a bearish
stranglehold on equities. The inherent risk in all of these is the possibility of
overreaction which can and should be mitigated by sustained confidence
building actions by market regulators.
Owing mainly to the recovery in the broader economy and corrective
actions by the CBN, key banking industry indicators maintained the path of
recovery in June as the non-performing loans (NPLs) ratio moderated and

the capital adequacy ratio (CAR) rose mildly. Other financial soundness
indicators (FSIs) including return on equity (ROE) and return on asset (ROA)
also suggested growing industry resilience. However, these improvements
are yet to translate to the much needed real intermediation. This is quite
concerning because financial stability isn’t an end in itself; it must lead to
improved services to the critical sectors of the economy, to be meaningful. It
is in this light that the Committee committed at the July meeting to another
initiative directed at promoting private sector credit. While that is expected
to soothe the situation in the short-term, a long-term solution would be one
that comprehensively addresses the risk concerns and apprehensions of
DMBs with non-prime borrowers in particular. On their part, industry
managers need to grow banks’ resilience to shocks as well as their capacity
to function by stepping up deposit mobilization and capitalization.
In my statement following the May 2018 meeting, I stressed the need for
buffers on both fiscal and monetary sides. I belief that this continues to be
important for overall stability, particularly in view of the rather hazy outlook
for global economic and financial conditions. Though much higher
compared to 2017, crude oil prices appear to be softening already (with
OPEC basket averaging $73.2 and $70.9 in June and July respectively from
$74.1 in May). Rising yields in the US and strengthening dollar could continue
to pressure reserves and currencies in emerging markets and developing
economies (EMDEs). These risks and others highlighted earlier lead me to the
same conclusion as in my last statement, which is that we need a cautious
approach to monetary policy at this time.
Overall, I could see the balance of risks tilting against price stability
particularly when due consideration is accorded external threats and the
domestic liquidity risk. However, given that most interest rates are currently
positive in real terms; routine monetary sterilization should be sufficient to
keep the stance of monetary policy tight without any new adjustments to
the primary policy levers at this point. As such I voted to retain all the

monetary policy parameters at the levels before the July 2018 meeting. That
is:
•
MPR at 14.0 per cent;
•
CRR at 22.5 per cent;
•
Liquidity Ratio at 30.0 per cent; and
•
Asymmetric corridor at +200 and -500 basis points around the MPR

2. ADENIKINJU, ADEOLA FESTUS
Introduction
The staff presentations at the July meeting of the MPC provided robust
information about the current and medium term outlook of the global and
domestic economies as well medium outlook for the Nigerian economy.
A lot of the developments reported at the last May MPC meeting maintain
their trajectories. However, a few others signal impending effects on the
course of existing monetary policies in Nigeria, if there is no time-path
reversal.
Development in International and Domestic Economies
The global and domestic economies broadly remain on the positive
trajectories since the May meeting of the MPC. Global output growth remains
robust as the US economy and others continue to pose strong positive
growth. Global commodity prices, including oil, maintain northward
trajectory. There is widespread disinflation in most emerging countries. The
labour market is also looking upbeat in the world’s largest economy.
However, the volatilities in capital market remain in emerging countries’
market.
However, a number of cloud continues to hang on the global economy: the
trade war between the two largest economies – the US and China continue,
global cooperation among OECD partners seem threatened, global tensions
have not abated much as US proceeds with the withdrawal from Iran nuclear
deal, the rising value of dollar and worries about inflation growth in the US
and the UK, will continue to exert pressures on portfolio investment and
foreign reserves in emerging markets as interest rates go north. Nigeria
remains one of the few countries that have been exempted from significant
currency depreciations largely due to the significant exchange reserves to
protect the Naira. Uncertainty on the Brexit negotiation increases uncertainty
on global economy.

In the domestic economy, a number of good news continue to be recorded:
foreign reserves accretion continues, annual output is projected to grow by
about 2.3 per cent at the end of the year, disinflation path continues year on
year, Purchasers’ Manufacturers index (PMI) climbs slightly. Staff presentation
shows a slight drop on quarterly unemployment rate.
Domestic deposit banks continue to record improved performance. NPLs
continue its downward trend. Deposit and asset values of the banks continue
to grow, however, credit growth to the private sector was negative. This is
unacceptable in the face of huge unemployment and relatively low
capacity utilization in the industrial sector. Bank operational costs remain
unacceptably high. This continues to keep lending rates unacceptably high,
which may affect the efficacy of simple reduction in the MPR. Lending rates
seems asymmetric to MPR changes under the current economic situation.
The low appetite for risky investment and flight to safer fixed income assets is
a source of concern to unlocking credit to the economy.
I support the MPC decision for the CBN to explore unconventional way of
unlocking credit to the private sector by exploring smart use of monetary
instruments and other methods.
However, the fiscal positions continue to be a source of major concern. High
deficit in the 2018 budget remains a source of concern. We are just not
building buffers in a period of high oil prices, we are also not living within our
means. Components of government revenues continue to underperform
while non-capital expenditure remains fairly sticky downwards in the first
quarter of 2018.
The inflationary pressures seem to be building up given the month on month
increase in headline inflation rate. There is a genuine anxiety about liquidity
surfeit in a pre-election year, with anticipated high election spending, as
political parties fail to keep to election spending guidelines, late passage of
the 2018 appropriation bill, the supplementary bill submitted to the National

Assembly, and the tensions between the executive and the legislature. I am
concerned about the low efficiency of the government capital expenditure,
which could provide a boost to the real sector, the rising fuel subsidy claims
by the NNPC, the emergent of inflation pressure, the proposed increase in
minimum wage, the uncertain fate of the PIB, the underperforming of the
power sector and rising debt service component of the 2018 budget.
Decision
My vote has been influenced by need to watch if the recorded month on
month increase in inflation rate is a signpost for emergence of excess liquidity
in the economy or a transient occurrence. I will keenly watch for this in the
next meeting of the MPC as it is important to ensure the MPC success so far to
sustain the primary mandate of the CBN to maintain price and exchange
rate stability is not reversed. I prefer to wait a little longer while hoping that
current efforts to enhance private access to affordable credit to support nonoil growth and increase job creation by the MSME, keeps inflation pressure
under lid.
Hence I cast my vote to maintain existing policy stance:
i.
Keep MPR at 14%
ii.
maintain CRR at 22.5%
iii.
Maintain existing asymmetric corridor around the MPR

3.
AHMAD, AISHAH
Half way into the year, the path of growth and other macro-economic
indices are more evident, but the effect of the emerging global and
domestic economic landscape still bears uncertainty.
Global growth forecasts threatened?
Whilst the IMF and World Bank retain their global growth projections for 2019
at 3.9% and 3.1% respectively, increasing trade and geopolitical tensions
challenges this optimism. Brexit negotiations are yet to breakthrough,
geopolitical risk of a trade war has begun to manifest as China, Mexico,
Canada all contemplate retaliatory trade tariffs in response to US trade
policy and the US has decided to exit the Iran nuclear deal and impose
broad sanctions on Iran. These are only a few examples of the potential
uncertainties and headwinds for growth; given that China and the US
contribute an estimated 53% of global GDP; we may yet see adverse effects
on global output.
This global picture expectedly has implications for domestic fiscal, monetary
policy and growth prospects. As long-established global trade arrangements
unravel, Nigeria must realign its trade policy seeking bilateral agreements
that ensure its relevance in the post trade-war world order. Sanctions on Iran
may raise oil prices, which is positive for Nigeria in the short term; enhancing
the ability to fund the budget and build fiscal buffers. Over the long term
however, shale oil investment and the reduction of fossil fuel dependence by
major economies (e.g. China) may mean that crude oil as a significant
revenue earner for Nigeria may diminish. This calls for urgency to diversify the
economy away from oil, by re-invigorating local industry to replace imports
and fuel growth.

Domestic growth indicators appear positive; While the GDP growth numbers
for the second quarter are still expected, the Purchasers Managers Index
(PMI) – a leading indicator for GDP, suggests expansion in economic activities
with 57.0 points recorded in June 2018, an improvement over the 56.5 points
in May 2018. Despite this positive trajectory, a stronger, more resilient and
inclusive growth is desirable in view of the currently high population growth,
unemployment rate and weak per capita income.
Stability and improved convergence in the exchange rate reflects the
importance of Nigeria’s external reserves buffer which has grown
substantially over the last two years and currently stands at N47.6billion as at
July 18th 2018. Accretion to reserves has been driven mainly by the sustained
recovery in crude oil prices, innovative exchange rate policies of the Central
Bank of Nigeria (CBN) across various segments and export expansion / import
substitution initiatives. These have given the CBN greater flexibility in
managing the exchange rate.
For instance, BDC rates appreciated to N360.5/$US (June 29) from N362.4/$US
in November 2017, whilst the premium between the interbank and BDC rates
narrowed to 17.9% from 18.48%, over the same period, indicating increasing
rate convergence due to sustained supply of Foreign exchange (FX) by CBN
and its commitment to promoting stability, liquidity and transparency in the
FX market. FX flows through the economy from CBN and autonomous sources
also improved; reports from Bank staff indicate FX from non-oil exports
increased by 22% from January to April 2017 compared with same period in
2018, and overall funds inflow into the FX market grew by 18% over the same
period.
Although recent foreign investor exits have put pressure on the reserves, the
CBN has been able to retain confidence of global investors by maintaining
the supply of investment outlets and intervening to support market liquidity
where required to facilitate seamless exits for international investors who are
so inclined. This willingness to defend the naira stability has gone a long way

to enhance market confidence and retain net positive FX flows which have
remained largely positive over the first half of 2018.
The stability of the naira, amidst improving domestic production and tight
monetary policy stance has helped moderate inflation trends. Recently
released data by the National Bureau of Statistics shows a further decline in
headline inflation to 11.23% in June 2018 from 11.61% in May 2018. Core and
food inflation also declined to 10.39% and 12.98% in June 2018 from 10.71%
and 13.45% respectively in the preceding month. However, month-on-month
headline inflation and its major components increased for the third
consecutive month since April, 2018 – signaling waning base effects and
possible expression of the anticipated inflationary shocks of huge fiscal
liquidity injections and early election spendings. Whilst these shocks are yet to
fully manifest, movements in monetary aggregates suggest a higher level of
liquidity than previously captured which threaten the price stability remit.
Monetary developments point to warning signs of expanding money supply.
Certain monetary aggregates indicate a higher than desired expansion in
money supply which has implications for inflation in the short term. Net
Foreign Assets annualized, grew by 36.3% in June 2018 against the provisional
benchmark of 18.15% for 2018. Bank staff are currently examining the
propriety of expanding the definition of monetary aggregates to capture the
full effect of monetary flows in the aggregate measures. Despite the
expansion in aggregate money supply, credit to the real economy remains
weak, underscoring the need to further stimulate bank lending, coupled with
sustained interventions by the CBN in growth enhancing sectors.
Whilst credit expansions lags, improvement in financial condition metrics for
the banking system is gratifying; the Banking stability report shows
improvement in capital adequacy ratios from 11.43% in February 2018 to
12.08% in June 2018 and declining non-performing loan ratios from 16.21% to
12.45% over the same period, reflecting the gradual positive impact of
economic recovery on the banking sector. Although the maximum and

prime lending rates declined marginally, new credit to the private sector also
declined and interest rates remained higher than ideal levels required to
stimulate new investment. Review of industry profitability indicates tightening
margins; with lower interest earned - as yields on government securities
moderate - and higher interest expense - as industry liabilities grow. For
instance, Interest margin to total operating income has declined on average
since December 2017. Hopefully, the quest to retain margins will help refocus
banks’ to increase lending to the real sector. As part of the CBN’s efforts to
expand access to credit and reduce interest rates to critical real sectors, two
key policy initiatives were considered; encouraging the issuance of
commercial papers and implementing a dynamic Cash Reserve Ratio (CRR).
It is welcome news that the 2018 Appropriation bill has been signed by the
President. Fiscal spending from the budgeted N9.1 trillion for 2018 fiscal year
should help expand economic activities, through improved household
income and capital expenditure. However, the recent reduction in Nigerian
oil production, if unchecked, may impact earnings and increase the
likelihood of a higher deficit which also threatens ability to build fiscal buffers.
More importantly, expected large liquidity injections over the second half of
the year, has inflationary tendencies which should be curbed through
cautious monetary policy decisions, to forestall reversing the disinflation gains
recorded so far.
Policy Decision
The foregoing developments justify retaining the tight policy stance adopted
over the last few MPC cycles to rein in negative price developments. This has
now become even more critical in the face of disappearing inflation base
effects and signs of significant growth in monetary aggregates.
Understandably, there is concern for substantially raising the MPR to achieve
the price stability remit, viz-a-viz the potential stifling effect of this tightening
stance on economic growth. However, a marginal increase in the MPR,
supported by heterodox policy interventions designed to increase credit to

critical export-stimulating and employment-generating sectors, should help
achieve the ultimate objective; price stability conducive to economic
growth.
Thus, I vote to raise the MPR by 25 basis points to 14.25% and retain the Cash
Reserve Ratio at 22.5%; Liquidity Ratio at 30% and Asymmetric corridor at -500
and +200 basis points around the MPR.

4.
ASOGWA, ROBERT CHIKWENDU
Introduction:
The July 2018 meeting held at a time of mixed signals on the key triggers of
monetary policy rates including inflation (current levels and forecasts), output
(current level and potential estimates) and official interest rate changes
abroad. In parallel with these triggers are uncertainties in the international
economic outlook relating to the escalating trade conflicts, the unresolved
tensions in the Middle East and the Korea Peninsula, while at the domestic
economic outlook there are still uncertainties with external reserve
movements and some financial market conditions. As such, even with rising
local market expectations of a possible downward slide in monetary policy
rates, these emerging developments would rather require a cautious
approach to policy decisions at this July MPC meeting.
International Economic Outlook
The ongoing monetary policy normalization in the United States and the
possibility of further adjustments is increasing uncertainty in the financial
markets across the globe. In March, the US Federal reserve raised the policy
rates by 25 basis points to 1.5-1.75 percent, while in June, the rates were
further raised to a range of 1.75-2.00 percent. This is believed to have
triggered a series of foreign portfolio outflow from several countries including
Nigeria, South Africa, Egypt and Ghana. With the Bank of England signalling a
rate hike in July/August 2018 and with projections of another hike in 2018 by
the US Federal Reserve, monetary policy stance in Nigeria at this time must be
cautious reflecting a balance between the magnitude and timing of
monetary policy adjustments amongst these developed countries (especially
USA and UK) while maintaining a balance between the domestic economic
forecasts especially inflation and output projections. Interestingly, while India
and Indonesia raised policy rates between May and June 2018, most other

countries including Japan, Brazil, China, South Africa, Egypt and Kenya
retained policy rates between May and June 2018.
Contrary to GDP growth forecasts for 2018, CBN staff report show that real
GDP growth rates for the first quarter in 2018 retracted in several countries
including US, the Euro Area, UK, China and South Africa when compared to
the fourth quarter of 2017. An upturn in the global growth is however
expected in the second and third quarters of 2018 given the favourable
investment climate, robust consumer spending and supportive fiscal policies
expected in many developed economies and the expected surge in prices
of several commodities. This is expected to happen despite the growing
trade conflicts. This can be a source of increased uncertainty regarding the
pace of expected monetary policy adjustments in the developed economies
in the event of a planned growth acceleration.
Similar to the 2018 first quarter trend of global output, there were signs of
inflationary trends across major economies. CBN staff report show that the US
inflation rose to 2.9% in June from 2.8% in May, while in the Euro area, it rose to
2.0% in June 2018 from 1.9% in May 2018. There were also moderate
inflationary increases in China, Egypt, South Africa, Ghana and Kenya in June
as compared to May, but unchanged in UK and Japan within the same
period. As inflation deviates from the target in many of these developed
economies, the process of monetary policy adjustment may probably
continue especially in the immediate period.
Global stock market volatility remains a key concern given its effect on
financial market liquidity especially for developing and emerging economies.
With the exception of the stock markets in North America (US, Canada and
Mexico), most other stock markets in Africa, Asia and South America
witnessed declines between April and July 2018. Despite this rise in volatility,
market sentiments and expectations remain largely positive as equity and
bond flows to emerging and developing economies are expected to

bounce back in the shortest possible period but this optimism is favourable
only with a relatively tight monetary policy stance.

Domestic Economic Outlook:
Short term prospects of the domestic economy generally show some
improvements especially for inflation and output trend, but there are mixed
signals for the external reserves as well as other financial market indicators.
The trend decline (year on year) for both headline and core inflation
continued in June 2018. Headline inflation dropped from 12.48 in April to
11.61 in May and further to 11.23 in June while core inflation also dropped
from 10.92% in April to 10.71 on May and further down to 10.39% in June.
While CBN staff forecast suggest a continued deceleration of inflation rates
up to November, the sluggish and sticky decline since May 2018 sends signals
of more vigilance. The anticipation of possible future inflationary pressures in
the last quarter of 2018 arising from both the expected election spending
and the 2018 budget injections will require a cautious monetary policy stance
at this time.
The domestic GDP remains robust eventhough the 2018 quarter 2 estimates
are yet unpublished at time of the July 2018 MPC meeting. Real GDP grew by
1.95% in the first quarter which is slightly lower than the revised 2017 fourth
quarter growth of 2.11%. It is expected that the growth momentum will be
maintained in the second quarter especially given the uptick in the June
Purchasing Managers Index (PMI). The Manufacturing PMI grew at a faster
rate in June when compared to the earlier months and indicating a
consistent expansion in the Manufacturing sector for a fifteenth consecutive
month. Similarly, the increase in June also indicating an expansion for a
fourteenth consecutive month. These points to positive sentiments on growth
prospects and realization of business expectations as well as general
improvements in the economy.

In contrast to the growth and inflation trajectory, there have been mixed
performance and some uncertainties in the external sector and financial
market indicators. For instance, recent mild volatility in the external reserve
position has seen it rising up to US$47.5billion by mid May 2018 but dropping
to $US46.91 in early June and increased somewhat after. This development
has been attributed to the sudden capital outflows initiated by mainly nonresidents. A similar volatility has been persistent in the last few months in the
capital market with almost daily swings in both the All-Share Index and total
Market Capitalizations. For instance, the Market Capitalization which stood at
14.9 trillion Naira in end of April 2018 had dropped to 13.26 by July.
Banking sector soundness indicators improved considerably by end of June
2018 based on CBN Staff report. There were improvements in the capital
adequacy ratio, the non-preforming loans ratio as well as the profitably
indicators (return on assets and return on equity). For instance, the capital
adequacy ratio which was 11.95% by April had increased to 12.08 in June
while the non-performing loan ratio which is a measure of the Industry’s asset
quality had reduced to 12,45% in June from the previous level of 14.15% in
April 2018. Surprisingly, the trend in total deposits and total assets declined
marginally between May and June 2018, but there was an increase in new
credit which raised the overall total credit between May and June. In
addition, the spread between maximum lending rates and the consolidated
deposit rates narrowed in June when compared to the earlier months.
Downside Risks to the Outlook:
Despite the positive momentum in the inflation rates, growth rates as well as
key banking soundness indicators, there are still significant downside risks with
potential to reverse any expected impact of the monetary policy stance at
this MPC meeting. These include the rising levels of debt, volatility of
commodity prices, capital flows. In addition, the increasing utilization of the
CBN Standing Lending Facility by deposit money banks and the continued

reluctance of banks to lend to the desired sectors of the economy pose
substantial threats to the monetary policy stance.
In my previous personal statements, I have mentioned the threat of rising
public debt in the midst of declining government revenue. Provisional fiscal
data up to June 2018 show that the total fiscal revenues still fall below the
target thus paving way for further accumulation of both domestic and
possibly external debt. As I rightly mentioned in my last personal statement,
once these debts are not backed by highly productive assets, it can pose
serous financial risk which portends future danger for the entire economy.
The oil price
Decision:
Given the collection of uncertainties at this July 2018 meeting of the
Monetary Policy Committee, especially relating to possible domestic
inflationary threats and swings in the international monetary adjustments, I
am personally disposed to a ‘wait and see approach’ and will therefore vote
to hold all parameters as they are.
• Retain the MPR at 14.0 percent
• Retain the CRR at 22.5%
• Retain the Asymmetric Corridor at +200/-500 basis points and
• Retain Liquidity Ratio at 30.0%

5.
BALAMI, DAHIRU HASSAN
INFLATION
The mandate of the CBN is primarily to control money supply to achieve price
and exchange rate stability. It also supervises and regulates the financial
institutions to promote economic growth and full employment. At the global
level, inflation is projected to rise from 3.1% in 2017 to 3.2% in 2018. The rising
level of price is due to increasing energy price (crude oil) and currency
depreciation in developing and emerging markets. As the oil price continues
to increase upward, inflation picked up moderately in some countries and
marginally above the long term trend in some advanced economies.
However, core inflation has become weak in many economies while it
appears to have bottomed out in the developing market. The domestic
inflation in Nigeria had decelerated for the 17th consecutive month although
still in double digits, which is still higher than the CBN expectations of 6-9 %.
Headline inflation, year-on-year, declined from 11.61% in May to 11.23% in
June 2018 due to relative stability in the foreign exchange market,
development activities of the central bank and restrained fiscal activities. The
drivers of price pressure such as high cost of transportation; high energy costs;
insurgency in the North-East; herdsmen and farmers clashes and other
security issues however remains structural.
CREDIT AND GROWTH
Domestic credit is important in stimulating real output in the economy when
properly managed. A number of studies have shown that credit granger

causes output and non-oil exports have positive relationship with credit.
Credit is also positively related to capital inflows and imports. It should be
noted that bank credit is closely related to opening of the economy to
capital inflows and international trade. Growth on the other hand is the
capacity to raise national incomes or level of production of goods and
services in an economy over a period of time usually one year. The
distribution of credit in June 2017/18 shows that oil and gas (30.4%),
manufacturing (12.9%), government (9.55%) and then general commerce
(7.37%), general (6.17%) and finance and insurance (5.31%), are the major
sectors with credit concentration. It is evident that some of the sectors with
the largest concentration of credit have low employment generation.
Therefore it should be of concern why credit to real sectors of the economy
such as agriculture, mining, quarrying, and real estate remain relatively low.
Though available data however shows increase in credit to Arts,
Entertainment and Recreation (34.45%), mining and quarrying (24.02%) and
other sectors such as finances and insurance (18.94%), water supply sewage,
waste management (16.46%) is high compared to other sectors such as
Construction (2.75%), Power and Energy (4.16%), Education (4.45%), and Real
estate activities (7.78%) including manufacturing (9.3%). Despite the
aforementioned percentage increase in manufacturing, construction and
real estate are not encouraging. Therefore there is need to channel more
credit to the real sector given its contribution to GDP and employment.
The low level of private sector credit might be due to high non-performing
loans. High interest rate on loans also discourages the private sector from
borrowing. The challenge of credit to the private sector is not only with high
interest rate but with lack of adequate collaterals. Greater proportion of
stakeholders in the economy do not have collaterals. Hence, the need to
introduce movable asset register to enable DMBs clients have collaterals
which would enable small scale borrowers to have access to credits.

Many economic agents called for a reduction in MPR which is seen as the
anchor rate. This rate which is determined by the MPC does not work as
expected in Nigeria. When the MPR rises, the Deposit Money Banks (DMBs)
raise their rates too, but whenever the CBN lowers its rate, the DMBs will not
lower their rate because of the need to maximise their earnings. As a result,
the CBN has adopted a number of unconventional monetary policies to
encourage access to credit to the real sectors of the economy through the
adoption of the following strategies;
i.
Anchor Borrowers Scheme
ii.
Small, Medium Scale Enterprises Fund etc.
iii.
Encouraging Company to Issue Commercial Papers to the Private
Sector
iv.
Creation of Movable Asset Register platform
The government lowered the treasury bills rate from 18% to 10.5%. This has
made the treasury bills less attractive to the DMBs and encourages them to
extend more credit to the private sector by reducing their lending rate to
single digit because of increase in their liquidity holdings.
In my opinion the Anchor Borrowers Scheme should be modified by slashing
the interest rate from 9% to 5%. The 5% interest rate should be shared
between the CBN (3%) and DMBs (2%) participating on the programs to
promote accessibility to credit and growth in the economy.
Credit expanded to the private sector of the economy will positively impact
on those operating in the real sector of the economy such as agriculture,
industry and manufacturing, as well as mining and quarrying. This will play an
important role in stimulating growth in the economy specifically in
employment generation sectors. The current rate of growth in the economy is
positive, but below the domestic desired growth rate of 5% or 6%, given the
rate of population growth rate of about 2.5%.
POLICY ISSUE

The marginal improvement in growth rate, inflation, CAR, NPLs, liquidity ratio
of the banking sector and the relative stability in the foreign exchange
market calls for a hold on the monetary policy stance. This is so because
further tightening would reduce output and dampen growth. On the other
hand, loosening would not be on the menu because it is likely to cause
inflation and destabilize the foreign exchange market and encourage
outflow of both FDIs and FPI which the economy is in dire need of. I therefore
vote to retain.
i.
MPR at 14%
ii.
CRR at 22.56%
iii.
Higher ratio at 30%
iv.
The asymmetric corridor at +200/-500 basis point.

6.
ISA-DUTSE, MAHMOUD
A.
EXTERNAL ECONOMIC CONDITIONS

The world economy is projected to grow by 3.9% in 2018, up from 3.8%
in 2017. This growth is expected to broadly benefit the Nigerian economy
through improved demand for commodities that Nigeria exports, mainly oil.
The growth in global economic activity however is being threatened by a
number of emerging factors including trade sanctions being imposed by the
US and retaliation by the countries targeted. Security concerns, geopolitical
tensions, conflicts and political uncertainty in several areas and regions have
also had a dampening effect on investment flows and have contributed to
sharp exchange rate movements and increase in risk premia in financial
markets.

The continued normalization of interest rates particularly in the US is
strengthening the US dollar against other currencies and contributing towards
a reduction in capital flows to emerging markets and developing countries.
Some countries have started to witness a reversal of the capital flows that
had occurred earlier on before commencement of monetary policy
normalization.
B.
DOMESTIC ECONOMIC CONDITIONS

The Nigeria economy has recorded growth in real terms over the last 4
quarters. The rate of growth increased from 0.72% in Q2 2017 to 1.17% in Q3
2017 and 2.11% in Q4 2017. The growth rate however decelerated slightly to
1.95% in Q1 2018, underscoring the fragility in the growth process. The level of

growth is also weak when compared to the growth rate in the global
economy and the population growth rate in Nigeria of more than 3%. All
hands must therefore be on deck to accelerate the rate of growth to a much
higher level to enable us achieve the targets set in the Economic Recovery &
Growth Plan.

The banking system has continued to harbour excessive liquidity, with
an industry liquidity ratio of 46% as at 30th June, 2018 compared to the
minimum prudential requirement of 30%. Industry data and complaints from
real sector operators indicate weak lending by the banks, especially to the
non-oil sector directly contributing to the weak economic recovery.
The liquidity overhang in the system is likely to worsen in the immediate
future on account of 2018 budget execution, election spending and the new
minimum wage proposals if approved. The recent gains in the fight against
inflation are thus vulnerable to a reversal. Inflationary pressures are actually
building up already as data indicate a deceleration in the rate of decrease
in year–on–year inflation and actual increase in the month–on–month
inflation figures for June 2018.
c)
VOTING DECISION:
Given the above scenario of excess liquidity, inflationary pressures and
attendant pressure on the foreign exchange rate, it is tempting to raise
interest rates now to help counter these debilitating forces. However, raising
rates now could choke off the nascent growth in the economy by raising the
cost of borrowing, decreasing access to credit and depressing aggregate
demand. In the face of this massive risk, our continuing vulnerability to
external shocks and elevated levels of uncertainty in our domestic and
external environments, I voted for maintaining the current policy stance:
•
MPR should remain at 14% p.a.
•
The asymmetric corridor around the policy rate (-500,+200 basis points)
should be maintained.
•
Liquidity ratio should remain at 30% p.a.
•
CRR should remain at 22.5% p.a.

If the liquidity situation and external conditions worsen in the coming
months, we should raise rates and use other instruments as well to reduce the
negative impact on inflation and exchange rates. Between now and the
next MPC meeting, we should just rely on open-market operations to
manage the level of liquidity in the system.


7.
NNANNA, OKWU JOSEPH
Buoyed by growing external reserves, improving fiscal buffer and driven by
high oil price, the growth trajectory will continue to be positive and stable
over the coming quarters. Available data showed that Real GDP grew by
1.95 per cent in the first quarter of 2018, compared to 2.11 per cent and a
contraction of 0.91 per cent in the preceding and corresponding quarters of
2017, respectively (NBS, 2018). The oil sector was the major driver of growth
during the period; it contributed 1.26 per cent, compared to 0.76 per cent
and a contraction of 1.56 per cent in the previous and corresponding
quarters of 2017, respectively. The manufacturing subsector contributed 0.33
per cent to real GDP growth while construction and trade contracted by 0.06
and 0.46 per cent, respectively. Growth in Agriculture slowed to 3.0 per cent
in the first quarter of 2018 compared to 4.23 and 3.39 per cent in the previous
and corresponding quarters of 2017, due to seasonal factor. Key PMI
indicators point to improvement in the economy. Specifically, manufacturing
and non-manufacturing PMIs stood at 57.0 and 57.5 index points in June 2018,
indicating expansion for the fifteenth and fourteenth consecutive months,
respectively. However, growth remains weaker than expected, consequently,
persistent high rate of unemployment – especially, amongst the youth
remains a challenge.
Though inflation has moderated downward owing to stable exchange rate,
month-on-month data shows evidence of incipient inflationary pressures.

Headline inflation declined to 11.23 per cent in June 2018 from 11.61 per cent
recorded in the previous month. Food inflation fell, modestly to 12.98 per cent
at end-June 2018, from 13.45 per cent in the preceding month. Similarly, core
inflation decreased to 10.40 per cent relative to 10.71 per cent recorded at
end-May 2018. The different metrics of inflation, on a month-on-month, basis,
however increased marginally in the month of June, due, mainly, to increase
in price of staple foods; and price of fuel and lubricants, respectively. The
anticipated deficit financing of 2018 FGN budget and 2019 election
spending including review of salaries and wages in September 2018
constitute upside risks to inflation in the near-term.
Despite the growth in the monetary aggregates and improved liquidity
conditions in the banking system, contraction in credit to the private sector
has continued to linger. Broad money (M2) grew by 2.79 per cent at endJune 2018, and 5.58 per cent on annualized basis, compared to the growth
of 4.86 per cent recorded at end-May 2018. Money market rates reflected
liquidity conditions in the banking system indicating the effects of OMO
auctions, foreign exchange interventions, FAAC distributions to states and
local governments, and maturing CBN Bills. The monthly average inter-bank
call and OBB rates for June 2018 were 16.32 per cent and 12.26 per cent,
respectively.
Commercial banks risk aversion has become very worrisome hence, derisking of lending to the SMEs and MSME subsectors should now be
considered a paramount policy priority in the near term. Claims on the core
private sector contracted by 0.04 per cent, annualised to a decline of 0.08
per cent at end-June 2018. Similarly, net claims on the Federal Government
fell by 9.74 per cent in June 2018, representing a decline of 19.48 per cent on
annualized basis. Against this backdrop, heterodox policy approach remains
a viable option towards encouraging banks to embrace lending to the real
sector. Accordingly, I endorse the introduction of a differentiated strategy in

the management of the CRR and the issuance of commercial papers by
corporates in the real sectors.
The banking industry continues to grapple with a high ratio of non-performing
loans (NPLs). While the recovery in oil price offers hope to the banking
industry, this may not likely impact on lending and asset quality in the near
term. Consequently, the combination of rising oil price, settlement of federal
government contractual obligations to the private sector creditors including
stronger economic growth may reduce NPLs, improve asset quality and
sustain financial system stability.
Bearish sentiment due to sustained investor profit-taking activities and
protracted monetary policy normalisation in some advanced economies
weighed in negatively on the financial markets. Consequently, the All-Share
Index (ASI) decreased by 7.24 per cent from 41.268.01 on April 30, 2018 to
38,278.55 on June 29, 2018. Similarly, Market Capitalization (MC) fell by 7.24
per cent from N14.95 trillion on April 30, 2018 to N13.87 trillion on June 29, 2018.
A reversal in the bearish trend is however expected in the medium term,
based on continued improvements in key macroeconomic fundamentals.
The potential expansionary fiscal policy in the domestic economy in the near
term remain a concern to macroeconomic stability. I therefore hope that for
greater efficiency in government expenditure and better focused and
targeted on capex and infrastructure spending; rather than on recurrent and
overhead.
The flexible exchange rate regime combined with the organic convergence
observed in the foreign exchange market will continue to support a healthy
balance of payments condition. The current account surplus observed in
recent times will be sustained on account of recovery in oil prices, high export
revenues and import substitution. The I&E window exchange rate which
closed at N361.08 on June 29, 2018, recorded a weighted average of
₦360.86/US$ as at end-June 2018. The naira exchange rate at the retail SMIS

window and the BDC segment remained unchanged respectively, at an
average of ₦330.00/US$ and ₦360.50/US$..
Against the backdrop of continued stability in the key macroeconomic
indicators and concerns about emerging fiscal surprises, I vote to raise the
MPR by 50 basis points and to hold the other policy metrics. This is to signal
the need to anchor inflation expectations and maintain positive interest rates
to strengthen domestic and foreign investors’ confidence.


8.
OBADAN, MIKE IDIAHI
The Nigerian economy has remained a noticeable part of the global
economy through trade and financial relationships. This implies that the
country must continue to take cognizance of international economic
developments/disturbances and their prospects in its domestic policy
initiatives. Such developments in the last few months include:
-
Uncertainties surrounding the status of North Korea’s de-nuclearisation
programme notwithstanding the talks held between the United States
(US) and North Korea on June 12, 2018. There are skepticisms over North
Korea’s commitment to complete denuclearization of the Korean
Peninsula.
-
Uncertainties and tensions surrounding the United Kingdom’s BREXIT
negotiations. There have been pressures for a second BREXIT while
some Ministers have resigned from the conservative government
because of policy disagreements.
-
Following the US’ cancellation of the Iranian nuclear deal, there are
indications that the US is considering imposition of sanctions on Iran. A
restriction on Iran’s oil exports is likely to unsettle the relative calm seen
recently in the oil market and trigger an oil price hike which could

strengthen Nigeria’s economic recovery but could also increase its cost
of importation of refined petroleum products.
-
Nationalistic and protective trade stance of the US. In recent months,
the United States government has been flexing muscle with the
international community, especially with the European Union, China,
Canada, Mexico, etc, over trade matters. It has already imposed
tariffs on steel, aluminum and other imports from these countries. Some
of the countries, for example, China and Canada, have reacted by
imposing their own tariffs on imports from the U.S. Others are
contemplating their own retaliatory tariffs on imports from the U.S. The
tariffs create uncertainties around global trade and could have ripple
effects throughout the global economy.
The implications of the above can be pervasive. For example, if the tariffs
and counter tariffs result in a tariff/trade war, they could escalate to such an
extent that everyone loses (the countries involved, producers, consumers,
etc) through reduction in global output and trade, high product prices facing
consumers and consequently loss in consumer welfare. Also, any threat of
resumption of tensions in the Korean Peninsula and the deadlocked trade
talks between China and the U.S could undermine the global growth which is
projected to witness improvement from 3.8 per cent in 2017 to 3.9 per cent in
2018. Besides, the movement towards monetary policy normalization by the
US Federal Reserve Bank could undermine growth. Yet, improved growth is
good for living standards and poverty reduction.
Global Output, Oil output and Prices
Global growth has seen continuous improvement since 2016 from 3.2 percent
in that year to 3.7 percent in 2017 and a projected 3.9 percent in 2018.
However, global economic activity could be undermined by escalating
trade actions by the U.S and retaliatory measures by its major trading
partners; tighter financial conditions with potentials for disruptive portfolio
adjustments; sharp exchange rate movements; reduction in capital inflows to

emerging markets having weak fundamentals and in relation to the present
financial conditions in the US.
One commodity of significant interest to Nigeria is crude oil. OPEC’s total
crude oil production averaged 32.33 mb/d in June 2018 while non-OPEC
output averaged 56.88 mb/d in Q2 2018. Both reflected increases over the
previous period. Similarly, global demand for oil grew by 0.38 mb/d driven by
strong demand from the United States, China and Europe – the world’s
largest energy consumers.
Certain developments in the global supply/demand for oil situation could
have negative implications for Nigeria’s oil exports and earnings. One of
these is the growing high levels of investment and production in shale oil in
the US which may likely have long term implications for oil prices. Secondly, is
the recent admission of the Republic of Congo as a member of OPEC. Its
target of 350,000 barrels per day could make it to become the third largest
producer in sub-Saharan Africa. Thirdly, the Chinese government has
deployed a new industrial policy, targeted at eradicating all machines that
depend on fossil fuels between 2022 and 2024. This is a major threat to
Nigeria’s continued dependence on crude oil revenue as other countries,
especially in the European Union are already working in the same direction.
This poses a major threat to the Nigerian economy, which makes it imperative
for the country to improve other sources of revenue to the economy.
Oil price has shown consistent upward trend for the various categories (OPEC
basket, Bonny Light, UK Brent, West Texas Intermediate) since 2016. For
example, the price of Bonny light on July 11, 2018, stood at US$78.83 per
barrel compared with a previous peak of US$78.06 per barrel on May 14, 2018
and commencement price of US$67.02 per barrel on January 2, 2018.

The sharp improvement in the price of Bonny Light largely reflects the
continued impact of the Organization of Petroleum Exporting Countries
(OPEC) production freeze and likely U.S. sanctions on Iranian oil. The recent

cancellation of the U.S–Iranian nuclear deal could shoot up oil prices well
above US$85.00 per barrel in the coming months as the U.S is set to restore
sanctions on Iranian exports.
The rising oil prices of crude oil is good news to Nigeria considering its heavy
dependence on oil earnings for domestic revenue and foreign exchange.
Indeed, the rising oil prices has fed into the economic recovery of the
country, promoted stability in the exchange rate and moderated the price
levels with the inflation rate decreasing from 12.48 per cent in April 2018 to
11.23 per cent in June 2018. However, on the flip side, considering the heavy
dependence of the country on imported petroleum products, the rising
prices of crude oil will result in increased prices of petroleum products
imported into the country with implications for the inflation rate. This
underscores the need for Nigeria to develop domestic refining capacity and
minimize importation of refined products.
And given the known instability/volatility of the crude oil market, the country
must learn from its past mistakes, save part of the earnings and prudently
deploy oil resources to diversify the economy as a basis for sustainable
sources of foreign earnings. In other words, there is now a huge opportunity
for Nigeria to build critical fiscal buffers and invest extensively in public
infrastructure to improve the investment climate and improve welfare.
Domestic Developments
Although Nigeria has exited recession, for four quarters: Q2 2017 to Q1 2018,
the growth rates achieved averaged only 1.50 percent which is very low
compared to the rate of growth of population of about 3.0 percent and very
much below the economy’s potentials. The outlook for growth remains
fragile, as the recurring incidence of herdsmen attack on farmers, would
affect agricultural output and increase prices. Other militating factors include
the expected liquidity challenge from late passage and implementation of
the 2018 budget, election spending, likely wage increase and the lingering
challenges of critical infrastructure necessary for job creation and economic
growth.

Inflationary pressure in the economy continued to moderate such that all
measures of inflation (headline, core and food) decreased further in June,
2018. The headline inflation declined to 11.23 percent, thus sustaining the
downward trajectory that began in 2017. The downward trend in domestic
prices reflects the Bank’s tight monetary policy stance coupled with the
impact of significant reforms in the foreign exchange market.
However, inflation at 11.23 per cent in June 2018, is still high and worrisome. It
is above the single-digit benchmark (range of 6 – 9%). Apart from monetary
factors, structural factors, including poor transport infrastructure, high cost of
energy, insurgency and insecurity in the North East; increasing cases of
herdsmen/farmers clash; anticipated 2019 election spending and review in
salaries and wages in September 2018, will constitute an upside risk to
inflation in the short to near-term.
On monetary development, relative to the level at end-December 2017,
broad money supply (M2) grew by 4.86 per cent in May 2018, which
annualises to a growth of 11.68 per cent. The growth of 11.68 per cent in
money supply was above the provisional benchmark of 10.84 per cent.
Consequently, increase in money supply amid the need for the deficit
financing of 2018 FGN budget, anticipated 2019 election spending and
review of salaries and wages in September 2018, will constitute an upside risk
to inflation in the short to near-term.

Financial market conditions showed a steady liquidity level during the period
November 20, 2017 to June 30, 2018. The liquidity boost in the system was as a
result of accretion through injections namely, Statutory Revenue Allocation
(SRA), Value Added Tax (VAT), sustained foreign exchange purchases by the
Central Bank of Nigeria and maturing NTBs and CBN bills.
The interbank naira exchange rates has been relatively stable. This relative
stability of the exchange rate was largely due to the various reforms
measures implemented by the CBN to deepen the market, and curb
speculative practices. And net foreign exchange flows have been positive

since January 2018, except in the month of May 2018, invariably, due to
improved oil market conditions. However, retail lending rates of DMBs have
remained high, and the interest rate spreads are very wide and this has
implications for savings and the flow of credit to the economy. This is an issue
which the monetary authority needs to address.
The financial system remains sound based on various measures of financial
soundness. The few cases of high non-performing loans in the portfolios of a
few DMBs have negative consequences on the banks’ earnings and capital.
However, the problem is being addressed by the CBN with corrective actions
to prevent spill over to other institutions or adverse impact on financial system
stability. And to enhance stability and soundness of the banking industry, the
CBN should continue to ensure that the banks: embark on aggressive debt
recovery drives; realize collaterals of non-performing credits as well as get the
insurance companies to settle claims relating to insured debts; strengthen risk
management practices; and strictly enforce the CBN restrictions on payment
of dividends by banks with high NPLs.
Monetary financing of fiscal deficits remains a source of inflationary pressures
in the economy. The 2018 budget projects a deficit of N1.95trn or 21.4 per
cent which would be financed by borrowing from both international and the
domestic sources. Considering the impact of continued borrowing on the
public debt stock which has been growing in a highly worrisome manner, it is
important for the government to seize the opportunity of the present regime
of high oil prices to reduce the rate of borrowing from both domestic and
foreign sources. A part of the excess of oil price beyond the benchmark
should be saved while the other is used to reduce budget deficit.
Opinion on Monetary Policy Stance
A review of developments in the global economy and domestic economy
reveals that the nation’s macroeconomic management has resulted in
improvement in a number of indicators: growth, inflation, oil prices, external

reserves, etc. Nevertheless, the following suggest the need for close
monitoring of developments and hence avoiding a recourse to a
destabilizing monetary policy adjustment:
i.
Although the inflation rate has been decelerating, it has, in recent
months, been doing so at a slow pace, perhaps because the impact
of the triple policy shock of 2016 on inflation has waned considerably
and monetary factors have resumed prominence. The inflation rate has
remained considerably above the Central Bank’s tolerance range of 69 per cent. Considering the background of stagflation which prevailed
until the first quarter of 2017, monetary policy remains the key tool for
tackling inflation while fiscal policy directly targets improved growth;
ii.
Fiscal disciple has yet to be entrenched. Government’s fiscal
operations will continue to impact liquidity and, hence inflationary
pressures. The Bank itself has not relented on its justifiable intervention
with
unconventional
monetary
policy
actions
aimed
at
complementing fiscal policy in achieving economic recovery. So, there
is need not to lose guard on inflation control;
iii.
In the next six months, a number of factors could accentuate
inflationary
pressures:
late
commencement
of capital
budget
implementation due to late passage of the budget; anticipated 2019
election spending through putting pressure on the foreign exchange
market, and upward review of salaries and wages in September 2018.
iv.
Effect of the continued normalization of US monetary policy, reflected
in U.S Federal Reserve Bank increasing its policy rate by 0.25 per cent in
March 2018, and further hiking it by 25 basis points in June 2018. This has
had the implication of attracting capital flows to the U.S from the
emerging market economies including Nigeria. Nigeria has already
started experiencing capital flow reversals.
v.
The rising oil prices in the world market is good for Nigeria’s economy in
terms of domestic revenue and foreign exchange. But because of the
country’s heavy dependence on importation of refined petroleum

products, the prices of market-determined petroleum products, e.g,
diesel, have already increased with implications for cost of production
and consumer prices.
The foregoing could impact inflation in an upward direction, perhaps,
suggesting a tighter monetary policy stance. But the recovery of the
economy definitely needs to be sustained/strengthened through incentivizing
the real sectors of the economy, hence, a less restrictive monetary policy
stance would be suggestive. However, there is need to strike a balance. To
this end, I vote that the macroeconomic trends should be watched for some
time while the monetary policy instruments should be retained at their current
levels: MPR – 14%; CRR – 22.5%; Liquidity ratio – 30%. At the same time, the
CBN should implement non-conventional monetary policy measures aimed
at enhancing access of priority sectors including small and medium
enterprises to credit at single digit interest rates.

9.
SANUSI, ALIYU RAFINDADI

Decision:
In the previous meeting, my vote for a hold on all the policy parameters was
premised on the need to sustain the on-going disinflationary process,
exchange stability and the positive output recovery. In today's meeting, I
vote to further tighten the monetary policy stance by raising the MPR by 50
basis points. My decision to further tighten is informed by the need for an
urgent policy action to rein in the inflationary pressures that have, according
to the latest data and staff forecasts, started to build up. My interpretation of
the available data suggests that the disinflationary trend is at the risk of
reversal, as inflation forecasts show a significantly flattened projection into the
last quarter of the year. Besides, the realised and expected monetary
conditions, as measured by developments in the broad monetary
aggregates, may not be tight enough to sustain the disinflation process in the
medium-term. Given that the key downside risks to the disinflationary process
noted in the previous MPC meeting continue to be relevant in the mediumterm, an optimal forward-looking monetary policy, in my opinion, requires a
further tightening.

Background and Justification
2.1 Global Economic Developments
The global economic developments and outlook, especially the sustained
monetary policy normalisation in the US, continue to have significant
implications for exchange rate stability, capital flows, asset prices and
consequently domestic inflation in the medium-term.
In line with the well-expected monetary policy normalisation, the US Federal
Reserve has increased its policy rate by a further 25 basis points, in June 2018.
On account of strong output and labour market developments occasioned
by the strong consumer spending, the Fed continued to express concerns
about the build-up of inflationary pressure in the medium term. These
developments imply that, as yields continue to rise in the US, capital flows
from the Emerging Markets and Developing countries to the US are likely to
rise, with its attendant implications for their exchange rate and price stability.
Available data indicate that these flows into the US economy have started to
rise,
2.2 Domestic Economic Developments
Available data suggest that, although the expected and realised domestic
economic conditions remain favourable for output, expected and realised
conditions are threatening to the on-going disinflation process.
Output growth remained positive, at 1.95 per cent, during the first quarter of
2018, driven by the oil sector, manufacturing, construction, trade and
agriculture. The outlook for growth in the medium term remains positive,
anchored on expected higher oil production, increased fiscal spending and
foreign exchange stability. Available data on the Purchasing Managers Index
(PMI) shows that, in June 2018, manufacturing and non-manufacturing
activities have risen for the fifteenth consecutive months.

The inflation data released by NBS today shows that the Year-on-Year
headline inflation has continued to decline, for the seventeenth consecutive
time, from 11.61 per cent in May 2018 to 11.23 per cent in June 2018. The
reduction in the headline inflation in June is at a somewhat slower rate (of
about 3.3%) relative to that achieved in April (of about 7%). Although the
Month-on-Month changes may not, in general, be reliable indicators of the
future direction of prices, the reported acceleration in the Month-on Month
headline inflation from 0.83 per cent in April to 1.09 per cent in May and 1.24
per cent in June, indicate the need for a cautious approach. This concern is
reinforced by the latest Staff Forecasts, which show that, although inflation
will continue to decline Year-on-Year, it is likely to reach the lowest of doubledigit in December 2018. The sluggishness of the expected decline in headline
inflation is due mainly to the expected oscillations in Food Inflation as the
effects of Farmer-Herdsmen conflicts materialise. Core inflation is, however,
forecasted to continue to decline, deriving the headline inflation in the
medium term.

In the monetary sector, available preliminary data appears to suggest that
liquidity in the economy may not have been adequately captured by the
current broad definition of money (M2). A newly constructed seasonally
adjusted broader definition (M3), which better captures liquidity outside the
banking system, appears to suggest that monetary expansion may have
been more significant than the 5.58 per cent indicated by the current M2.

The Basis for My Policy Choice
The primary consideration that informed my decision to vote for tightening is
the need to sustain the on-going disinflation in the medium term. The data
available suggest that, although the realised headline inflation has declined
and is forecasted to continue to moderate, the risks of reversal in the
medium-term, as noted in the upward trend in the month-on-month measure,
are significant. A forward-looking monetary policy, therefore, should act now

to curtail the threats to the on-going disinflation by waning the inflationary
pressures that are building up. Besides, by keeping real interest rate positive,
tightening will help reduce the risk of capital flows reversal in response to US
policy normalisation.

The anticipated fiscal stimulus expected from the implementation of the
approved 2018 budget, along with the expected rise in spending by
politicians in the second half of the year partly alleviate the concern for
possible reversal of the fragile output recovery. These would significantly
boost aggregate demand in short- to medium-term. Also, the Central Bank’s
effort at encouraging banks to expand credit to the employment-elastic real
sector would directly help boost output.

Consequently, to further tighten voted to:
• Raise the MPR by 50 basis points to 14.5 per cent;
• Retain the CRR at 22.5 per cent;
• Retain the asymmetric corridor at +200/–500 basis points; and
• Retain liquidity ratio at 30.0 per cent.

10.
EMEFIELE, GODWIN I.
GOVERNOR OF THE CENTRAL BANK OF NIGERIA AND CHAIRMAN, MONETARY
POLICY COMMITTEE
Congruent with CBN’s mandate, it is essential to underscore the ramifications
of inflation expectations for long-run price stability; especially on the
backdrop of near-term outlook. Given the uncertainties that typically
pervade a macroeconomy, failure to deal with rising inflation expectations
would unreservedly lead to actualisation. Accordingly, my considerations
today are guided by the need to ensure long-run price and monetary
stability amidst rising inflation expectations. As policymakers, our collective
desire is to achieve low unemployment rate, low interest rate, low inflation
rate, and stable exchange rate. Concurrent achievement of this is, however,
infeasible due to immanent trade-offs.
Available data indicate that unemployment rate remains discomfortingly
high. With sustained decline in headline inflation –to 11.2 percent in June
2018– real cost of capital is rising, amidst exchange rate stability. Persistent
macroeconomic imbalances and vulnerabilities could be exacerbated, in
the near-term, by the anticipated electioneering and fiscal injections. This

concern is amplified by probable capital flow reversals due to rising yield in
the US.
With growth projections of 3.9 percent in 2018 and 2019 vis-à-vis 3.7 percent
in 2017, short-term global outlook brightened, although risks and fragilities
persist. This expansion is uneven, showing upward momentum in the US but
downward revisions in the EU, the UK and Japan. Growth is projected to
strengthen in emerging markets and developing countries in the short-term,
albeit unevenly. Whilst outlook in some oil exporters are improving, exchange
market pressures are intensifying in a number of economies. In sub-Saharan
Africa, growth is projected to quicken in the short-term; reflecting upward
momenta in Nigeria and South Africa. Global impetus is, however,
susceptible to worsening financial markets and exchange rate fragilities
among emerging markets and developing economies, heightened trade
and geopolitical tensions, and recondite BREXIT negotiations.
Short-term growth prospects in the domestic economy continued to
strengthen even amidst noticeable downside risk. Staff estimates projects
2018 real GDP growth at 2.2 percent from 0.8 percent in 2017. Quarterly
analyses indicate a marginal rise from 2.1 percent in 2017q4 to 2.0 percent in
2018q1; 1.4 percent of which is due to the oil sector and 0.6 percent to nonoil sector. Sectoral disaggregation of q1 growth shows that 0.7 percent
derives from agriculture sector, 1.6 percent from industries, and 0.3 percent
contraction of the services sector. Near-term projections suggest that
quarterly growth will increase steadily to 2.5 percent by 2018q4, driven by
rising oil prices, continued exchange rate stability, and possible aggregate
demand effect of the expected fiscal and elections spending. The prevalent
high unemployment rate and the potential exchange market pressure ––due
to yield induced capital reversals–– imply that this growth outlook is fragile.
Hence, to sustain the cyclical rebound of the economy, prudent and wellbalanced macroeconomic policies remain imperative.

Data from the National Bureau of Statistics shows that the asymptotic rate of
disinflation, though observed for seventeen consecutive months, is
flattening. Juxtaposed with in-house projections, however, the emergent
trend suggests an imminent uptick in inflation in the near-term, if not
sufficiently mitigated. According to the NBS, headline inflation declined by
0.4 percentage points to 11.2 percent in June 2018, reflecting the declines in
both food and core components. While the observed trend of disinflation is
heartening, inflation is still outside the Bank’s tolerance range. I note with
concern that the benign base-effect is waning while inflation expectations,
due to anticipated liquidity injections, are mounting. Consistent with the
price stability mandate of the CBN, it is pertinent to sustain the pace of
disinflation.
Relatedly, data for June 2018 indicates some expansion in money stock.
Analysis of liquidity conditions shows that although narrow money supply
(M1) contracted, broad money supply (M2) grew at an annualised rate of
5.6 percent vis-à-vis the 10.8 percent benchmark. The expansion in M2
reflected the 36.3 percent annualised growth of net foreign assets. This
contrasts the parallel declines in net claims on government and private
sectors credit. I note that the poor supply of credits to private sector
continue to reflect the risk aversion of banks in the face of high NPLs. The
private sector, therefore, needs to be sufficiently de-risked in order enhance
its risk standing, accelerate economic diversification and ensure inclusive
growth.
Methodical assessments of recent macroeconomic outcomes and outlook
call for careful balancing of policies in order to achieve the most optimal
results. I note that the sustainable rebound of the Nigerian economy could
be derailed in the near-term if imminent shocks are misjudged. Crucially, I
note once again that (i) the cyclical recovery of Nigerian economy is still
fragile, (ii) structural and market vulnerabilities persist, (iii) inflation is declining
but still outside acceptable band ––with probable risk of upturn in the short-

term, (iv) the relative stability in the exchange rate and the level of external
reserves are satisfactory ––although rising yields in the US is concerning, (v)
the
expected
budgetary
injection
and
elections
spending
could
disproportionately expand aggregate demand. These underscore the need
to sufficiently provision the adverse impulses on price and exchange rate
stability in the short-term.
As a central bank, inflation remains our predominant objective, with
exchange rate stability clearly within sight. I am committed to driving
inflation to single-digit levels and building sufficient foreign reserves buffers to
defend the naira. Again, I note that whereas concurrent exchange rate
stability, low inflation and low interest are desirable, this is impracticable at
this time. Inflation upswing is imminent if we failed to act. My immediate
predisposition, thus, is to further tighten domestic policy stance in order to
rein in expected inflation and ensure FX market stability. Nonetheless, I
continue to re-emphasise the need for cautious policy decisions. I am of the
opinion that the prevailing level of real policy interest rate is appropriate to
balance the objectives of exchange rate stability, price stability and output
stabilisation without introducing disruptive policy shocks. With continued
permeation of previous policy tightening, the observed improvements in key
macroeconomic variables, and while being mindful of potential near-term
risks, I vote to:
1. Retain the MPR at 14.0 percent;
2. Retain the CRR at 22.5 percent;
3. Retain the asymmetric corridor at +200/–500 basis points; and
4. Retain liquidity ratio at 30.0 percent

GODWIN I. EMEFIELE, CON
Governor

July 2018