Nigeria: CBN Retains Interest Rate At 14%

22 January 2019

Nigeria's Central Bank on Tuesday again left lending rate for banks unchanged in its efforts to rein in inflation and stabilise the financial system.

The CBN governor, Godwin Emefiele, told journalists that the Monetary Policy Committee (MPC) resolved during its meeting in Abuja to retain the monetary policy rate (MPR) at 14 per cent.

The MPR, the rate the CBN lends to commercial banks, has remained unchanged at 14 per cent for 30 consecutive months or 15 meetings of the MPC, since July 2016. It moved from 12 per cent in June 2016.

Mr Emefiele said the committee also resolved to retain the cash reserve ratio (CRR) at 22.5 per cent and liquidity ratio at 30 per cent, with an asymmetric corridor of +200/-500 basis points around the MPR.

The CRR is the funds kept with the CBN as a minimum deposit a commercial bank must hold as reserves, rather than lend out.

It is a monetary policy tool used to influence borrowing and interest rates by changing the amount of money at the banks' disposal for loans purposes.

The CRR on private sector deposits is always lower (about 20 per cent), while CRR on public sector deposits is often higher (about 75 per cent).

Although the economy recovered in the second quarter of 2017, after two consecutive quarters of contraction, it remains largely fragile and susceptible to the recession at about 1.81 percent growth rate in the last quarter of 2018.

Mr Emefiele warned government against the risk of rising debt level, which he noted was approaching the pre-2015 levels.

He said the country's foreign reserve has grown from $42.54 billion as at December 2018 to $43.28 billion as at January 21.

Last November, the MPC took the decision to retain the lending rate amid a resurgence of global inflationary pressures, increased fragilities in the global financial markets, and weakening crude oil prices.

See What Everyone is Watching

More From: Premium Times

Don't Miss

AllAfrica publishes around 600 reports a day from more than 150 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.