BREAKING: CBN finally lowers interest rate to cushion COVID-19 impact

By Editor on 28/05/2020

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After years of maintaining leaving the monetary policy parameter unchanged, the Monetary Policy Committee (MPC) of Central Bank of Nigeria on Thursday, elected to go for an adjustment, reducing the Monetary Policy Rate (MPR), or the controlling lending rate from13.5 per cent in January to 12.5 per cent, but left others still unchanged.

Godwin Emefiele, the CBN Governor, who read the resolution, at the 273rd Monetary Policy Meeting, said the committee resolved to retain the Liquidity Ratio at 30 per cent, Cash Reserve Requirement (CRR) at 27.5 per cent and the asymmetric corridor at +200/-500 basis points around the MPR.

The MPR is the instrument used by the Central Bank of Nigeria through the MPC to control interest/ lending rates.

This is the seconding MPC meeting in row that will be held under COVID-19 protocols. While delivering the communique, CBN Governor, Godwin Emefiele said other monetary policy parameters remained unchanged.

Emefiele said the MPC resolved to retain the Liquidity Ratio at 30 per cent, Cash Reserve Requirement (CRR) at 27.5 per cent and the asymmetric corridor at +200/-500 basis points around the MPR.

The tightening policy was inappropriate at this point, he said, adding for instance that lowering of the policy rate would encourage credit expansion and create jobs which would in turn revive the economy.

Emefiele, who added that the outlook on the broader economy remains uncertain due to the impact of the virus on the country, said the decision part of the bank’s measure to mitigate the impact of coronavirus on households and businesses. The pandemic has affected the economy resulting in fall in oil revenues and lockdown which paralysed businesses across the country.





Posted on May, 28 2020

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