CBN Slashes Monetary Policy Rate to 11.5%
The Central Bank of Nigeria’s Monetary Policy Committee (MPC) on Tuesday slashed its benchmark monetary policy rate (MPR) to 11.5 per cent from 12.5 per cent.
CBN Governor, Godwin Emefiele, announced this in Abuja while briefing journalists on the outcome of the September 2020 MPC meeting.
The cash reserve ratio was however left unchanged at 27.5%, the apex bank noted.
The CBN said the move is to boost the resumption of economic activities necessary to stimulate growth, accelerate the pace of recovery and restore livelihoods, particularly the vulnerable in the Nigerian society.
When the MPR was slashed earlier in the year, Emefiele said the decision of the MPC was informed by the impact of the Covid-19 pandemic on the economy, increased inflationary pressure, restrictions in international trade, among others.
Also Read: CBN Expands Forex Abuse Investigations from Betting Firms to 55 Companies
He highlighted the decline in the nation’s GDP as well as the decline in the manufacturing and non-manufacturing purchasing index which were attributable to slower growth in production, rate of unemployment, amongst others.
In his chat with newsmen in Abuja on Tuesday, Emefiele, stressed that with the pandemic and external shocks, the central bank would continue with its aggressive development finance intervention in the real sector of the economy.
| IN CONTEXT The new development implies that the cost of obtaining a loan from deposit money banks will reduce. The MPC projected that a reduction in the MPR will put pressure on the deposit money banks to lower cost of credit and the cheaper credit will improve demand, stimulate production, reduce unemployment and support the recovery of output growth. Emefiele noted that the apex bank’s primary mandate revolves around price stability and the need to support the recovery of output growth. Expectedly, he said the likely action to address the rise in domestic prices would have been to tighten as it would moderate upward pressure on prices and attract fresh capital to improve the state of the economy and external reserves. However, holding the rates would allow the economy adjust to the stimulus measures designed by monetary and fiscal authorities. Various economies of the world have had to address the disruption brought by the coronavirus pandemic by cutting interest rates. In March, the United State’ Federal Reserve cut interest rates to essentially zero. The Federal Reserve said the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. It, thereafter, launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the pandemic. |
2 Comments