The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), has officially cut the Monetary Policy Rate (MPR) to 13.50% from 14%, while retaining CRR at 22.5%.
The CBN Governor, Godwin Emefiele, disclosed this during a press conference at the end of the two-day MPC meeting held on Tuesday in Abuja. The cut is the first time the MPC altered the MPR since July 2016.
The new rate contradicts analysts’ predictions that MPC would keep the MPR unchanged. Also, recall that the MPC, in its January communique, stated that the possibility of loosening the rates was remote due to domestic and global inflationary pressures.
Highlights of MPC meeting
- MPC cut down the MPR by 50 (0.5%) basis points to 13.50% from 14%.
- All other key parameters are held unchanged
- Asymmetric corridor of +200/-500 basis points around MPR was retained
- Retain the CRR at 22.5%; and
- Retain the Liquidity Ratio at 30%.
MPR cuts aimed at strengthening the nation’s feeble economic growth
In an attempt to justify the cut in MPC, Mr. Emefiele reiterated that the cut in the rates was to support the nation’s feeble economic growth at this time.
The CBN governor further highlighted the need to cut MPR to help reduce the unemployment rate and bolster the diversification agenda of the country’s economy.
Global economic events led to drop MPR
The CBN governor noted that uncertainties surrounding the global economies suggest increasing macroeconomic global vulnerability in the medium term.
According to the CBN governor, global economies were characterized by legacy headwinds from the second half of 2018. Mr. Emefiele noted the following episodes that characterized the global economy,