The monetary policy rate (MPR) has been reduced to 12.5% from 13.5% by the Central Bank of Nigeria's (CBN) monetary policy committee. The cut comes amidst the economic fallout of COVID-19 and the projected recession set to hit Nigeria.
While speaking on the reason for reducing the monetary policy rate, CBN Governor, Godwin Emefiele, said the disruption of the economy by the coronavirus pandemic had made it impossible, or in his word "inappropriate" to keep the rate at 13.5%, hence the new rate at 12.5%.
Note that the MPR is the interest rate used by CBN to lend to banks. It is the benchmark against which other lending rates in the economy are pegged. Also, it is used to moderate inflation in the economy.
Emefiele made this known during the monetary policy committee’s meeting today. AllNews recalled that the pandemic had forced Nigeria to lockdown businesses and key economic sectors. While some businesses have resumed to skeletal operation, a key sector like Aviation has remained on lockdown.
This measure affected both the formal and informal sectors, with companies downsizing and cutting salaries to remain operational. Many Nigerians have lost their jobs, while self-employed Nigerians are counting their losses to COVID-19.
The cut in monetary policy rate had occurred after CBN suspended intervention loan repayment and cut its interest rate from 9% to 5% and promise to keep implementing measures that will form as a relief for affected households and companies.
Meanwhile, the Cash reserve ratio (CRR) was kept at 27.5%, while the liquidity ratio was retained at 30%.
Fakoyejo Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ)....
0 Comment(s)
SPONSORED
HEADLINE
TRENDING