The Central Bank of Nigeria (CBN) through its Monetary Policy Committee (MPC), has announced a reduction of the Monetary Policy Rate (MPR), from 12.5% to 11.5%.
The Governor of the apex bank, Godwin Emefiele, disclosed this while reading a communique at the end of the MPC meeting on Tuesday.
The statement revealed that the committee retained CRR at 27.5% and emphasized that monetary policies didn’t influence inflation but by policies.
The decisions by the committee included a reduction of the MPR by 100 basis points from 12.5% to 11.5%, adjustment of the asymmetric corridor from +200/-500 to +100/-700 basis points around the MPR, retaining of the CRR at 27.5% and the maintenance of the liquidity ratio at 30%.
The CBN boss further revealed that the primary mandate of the committee is to stabilise price and boost growth in output. He stressed that the committee noted that the likely action aimed to address the rise in domestic prices would have been to tighten the stance of policy, as this will not only moderate the upward pressure on prices, but will also attract fresh capital into the economy, and improve the level of the external reserves.
The committee expressed the view that the decision would provide cheaper credit to improve aggregate demand, stimulate production, reduce unemployment, and support the recovery of output growth.
In addition, the Committee noted the tendency of an asymmetric response to downward price adjustments by ‘Other Depository Corporations’, thus undermining the overall beneficial impact of a reduction, to the cost of capital.
After all considerations, members were of the opinion that the option to lose will complement the Bank’s commitment to sustain the trajectory of the economic recovery, and reduce the negative impact of COVID-19.
