Apparently agreeing with economic experts’ clamour for downward review of lending rate by banks in the country, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) concluded its two-day meeting on Tuesday with the reduction of the Monetary Policy Rate (MPR) by 50bps to 27.00%
At the end of the 302nd MPC meeting, the committee also adjusted the asymmetric corridor at +250/-250 around the MPR, Cash Reserve Ratio (CRR) of deposit money banks to 45%, retained the CRR of merchant banks at 16%, and kept the liquidity ratio constant at 30.00%.
Announcing the key decisions taken by the committee at the end of its meeting on Tuesday in Abuja, the CBN Governor, Olayemi Cardoso, said the decisions were based on the need to sustain the slowing inflation over the past few months and fast-track the nation’s economic recovery.
The decision by the MPC to cut the MPR was the first time in five years, precisely in in September 2020, when it lowered the MPR from 12.5 per cent to 11.5 per cent to support the economy during the COVID-19 pandemic.
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Following the gradual recovery of the economic from the COVID-19 devastating impacts since then, the CBN had maintained a hawkish monetary stance, raising interest rates in response to surging inflation in the economy.
For instance, in September 2024, the MPR was hiked to 27.25 per cent from 26.25 per cent in May of the same year, to rein in inflation and support exchange rate stability.
Since then, the MPR has been hovering around the 27.25% to 27.5% axis as the apex bank continued to balance its monetary policy decisions with emerging fiscal and other macroeconomic factors to ensure that the financial system continues to contribute to government’s initiatives targeted at boosting the growth of the nation’s economy.
