There is about N500billion gap between the levels of the current monetary aggregates and the benchmark levels for 2009.
Mallam Sanusi Lamido Sanusi, the governor of Central Bank of Nigeria (CBN) gave this indication during the Monetary Committee Meeteing (MPC) in Abuja last week, assuring that there would be a quantity easing to bridge the gap.
This is coming against the backdrop of the revelation that “as at October 30, 2009, foreign reserves are provisionally estimated to be US$43.05billion,” down from the US$43.34billion level as at end of September, 2009.
Sanusi revealed that the modalities for quantitative easing include investments in bonds to be issued by Asset Management Company (AMC).
He however added that the setting up of the AMC is subject to the approval of the National Assembly.
Other modalities, he said, include the redemption of promissory notes issued by the Federal Ministry of Finance as well as the CBN in connection with the retirement of debt and liabilities arising from purchase and assumption of failed banks.
The communiqué issued at the end of the meeting also indicated that the Monetary Policy Rate (MPR) will remain unchanged for the remaining quarter of the year at 6 per cent, but an asymmetric corridor of interest rates around the MPR is introduced.
“The rate on the standing lending facility will remain at 200 basis points above the MPR, while the rate on the standing deposit facility will be 400 basis points below the MPR,” the apex bank also decided.
Besides, with effect from November 16, 2009, the temporary ban placed by the CBN on the use of Bankers’ Acceptances and Commercial Papers will be lifted, while the guidelines will be issued by the bank prior to that date.
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