The Monetary Policy Committee (MPC), of the Central Bank of Nigeria (CBN), has voted to reduce the Monetary Policy Rate (MPR), from 12.5% to 11.5%.
This was disclosed by the bamk’s Governor, Godwin Emefiele while reading the communique at the end of the MPC meeting on Tuesday.
He said, “At present, fiscal policy is constrained and so cannot, on its own, lift the economy out of contraction or recession given the paucity of funds arising from weak revenue base, current low crude oil prices, lack of fiscal buffers and high burden of debt services.”
The MPC said the majority of its members voted to reduce the monetary policy rate (MPR) by 100 basis points, from 12.5 per cent to 11.5 per cent, while adjusting its symmetric corridor around the MPR from +200 and -500 basis points to +100 and -700 basis points.
The 10 members of the committee who were in attendance also voted to retain the Cash Reserve Ratio and Liquidity Ratio at 27.5 per cent and 30 per cent respectively.
The CRR is the funds kept with the CBN as a minimum deposit a commercial bank must hold as reserves, rather than lend out to customers, while liquidity ratio is the portion of assets that can easily be exchanged for money compared to the total assets of a bank or other financial institution.
The Nigerian economy contracted by 6.1% (year-on-year) in the second quarter of the year, as a result of the disruptions caused by the COVID-19 pandemic. The MPC however projects a positive growth in the last quarter or at least Q1 2021.