Nigeria-Economy

Nigerian Central Bank cuts lending rate

APA-Abuja (Nigeria)

For the first time since 2016, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has cut down the benchmark lending rate from 14 percent to 13.5 percent to further promote economic growth.

Central Bank Governor, Godwin Emefiele said this when he briefed journalists in Abuja on Tuesday on the outcome of the 266th Monetary Policy Committee meeting.

This is the first time the rate has been altered since July 2016.

Emefiele said all 11 members were present at the meeting and six out of 11 of them voted to reduce the Monetary Policy Rate (MPR) by 50 basis point.

He explained that two members voted to reduce the MPR by 25 basis point, another two members voted to hold the MPR at 14 percent while one member voted to reduce it by 100 basis point.

He also said that ten members voted to hold all other parameters at the present rate, while only one member voted to reduce the cash reserve ratio.

To this effect, he said the Cash Reserves Ratio (CRR) remains unchanged at 22.5 percent, liquidity at 30 percent and Asymmetric corridor at +200 and -500 basis points around the MPR.

“The committee felt that given the relative stability in the key macroeconomic variables, there is a need to signal a new direction and in which case we are talking about being pro-growth.

He said that the committee also harped on the need to debase the Gross Domestic Product (GDP) of the country, which was last carried out in 2010.

The Monetary Policy Rate (MPR) controls the cost of short-term borrowing, money supply, lending rate, interest rate and inflation in an economy.

It ensures price stability and general trust in a country’s currency.

Simply put, MPR is the baseline interest rate and every other interest rate used within an economy is built on it.


MM/as/APA

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