MPC Has Fulfilled Statutory Meeting Requirements — CBN

*Clears FX Backlogs Of 31 Banks

The Central Bank of Nigeira (CBN) has said it has fulfilled the statutory meeting requirements of the Monetary Policy Committee (MPC) for this year, even as it said clearing of foreign exchange backlog is still ongoing with 31 banks having their backlogs cleared.

The governor of the CBN, Dr Olayemi Cardoso whilst speaking at the weekend had cleared the air on the reasons the MPC meeting which had been scheduled for the 21st and 22nd of this month did not hold.

Whilst many were expectant of a policy direction to be communicated at the last Monetary Policy Committee meeting of this year, a meeting that was supposed to hold this month, they had become even more apprehensive after the apex bank shelved the meeting and remained quiet on the reasons the meeting did not hold.

For the second consecutive time this year, the MPC had postponed its statutory meeting. The MPC is expected to meet bi-monthly except otherwise, in the event of an emergency. The last meeting that was held by the committee was held in July and was spearheaded by the then acting governor of the apex bank, Adebisi Shonubi.

President Bola Ahmed Tinubu had in early September announced Dr Olayemi Cardoso as the governor of the CBN alongside the appointment of new deputy governors. Cardoso in his keynote address at the Bankers Dinner in Lagos eventually put a lid on the matter after he announced that the required number of meetings had been met, hence implying that there would not be another meeting this year.

According to him, the CBN Act of 2007 stipulates that the MPC meets at least four times a year, “and the Bank has satisfied this requirement for 2023. We have critically reviewed the effectiveness of the Central Bank’s monetary policy tools and have spent time fixing the transmission mechanism to ensure the decisions of MPC meetings actually result in desired objectives.

“For quite some time, there has been a dislocation of our monetary transmission mechanisms rendering the MPC meetings largely ineffective. Our focus has been on ensuring these meetings are useful and effective.”

The MPC is the highest monetary policy making body and consists of the CBN governo0r, the four deputy governors, two members of the Board of Directors of the bank; three members appointed by the President and two members appointed by the governor of the CBN.

The CBN 2007 Act stipulates that the “MPC shall have responsibility within the Bank for formulating monetary and credit policy.”

The committee is also saddled with the mandate of reviewing economic and financial conditions in the economy, monetary policy framework and adopt changes when necessary; determining appropriate stance of policy in the short to medium term as well as communicate monetary/financial policy decisions effectively to the public and ensure the credibility of the model of transmission mechanism of monetary policy.

Cardoso stated that going forward, monetary policies will aim to achieve price stability, foster sustainable economic growth, stabilize the exchange rate of the naira, and reduce interest rates to facilitate borrowing and investments in the real sector.

“In order to ensure the proper functioning of domestic and foreign currency markets, clear, transparent, and harmonized rules governing market operations are essential. New foreign exchange guidelines and legislation will be developed, and extensive consultations will be conducted with banks and forex market operators before implementing any new requirements.

“We have already witnessed improvements in forex market liquidity in recent weeks, as the market responded positively to tranche payments which have been made to 31 banks to clear the backlog of forex forward obligations. We have been subjecting these payments to detailed verification to ensure only valid transactions are honored. In a properly functioning market, it is reasonable to expect significant forex liquidity, with daily trade potentially exceeding $1.0 billion. We envision that, with discipline and focused commitment, foreign exchange reserves can be rebuilt to comparable levels with similar economies.