Central Bank of Nigeria reduces Monetary Policy Rate to 12.5 percent

The Monetary Policy Committee (MPC) of Central Bank of Nigeria on Thursday has reduced the Monetary Policy Rate (MPR) to 12.5 percent, from 13.5 percent, according to a news report by Premium Times.

The MPR is the interest rate at which the central bank lends to commercial banks. It ultimately affects the rates at which individuals and businesses can source loans from commercial banks as such loan rates cannot be lower than the MPR.

The reduction was announced after the MPC meeting by the Governor of the Central Bank of Nigeria, Godwin Emefiele.

The MPR is the instrument used by the Central Bank of Nigeria to control interest/ lending rates.

While delivering the communique, Emefiele said other monetary policy parameters remained unchanged.

He said the MPC resolved to retain the Liquidity Ratio at 30 percent and the Cash Reserve Requirement (CRR) at 27.5 percent.

Similarly, he said, the MPC retained the asymmetric corridor at +200/-500 basis points around the MPR. Many Nigerians had called for a slash of the MPR as the nation's economy suffers from the impact of the coronavirus pandemic.

The Central Bank of Nigeria (CBN), yesterday has also reduced interest rates on its facilities by participating in Other Financial Institutions (OFIs) from nine percent to five percent per annum for one-year, effective March 1, 2020.