CBN Holds Benchmark Interest Rate at 13.5%

The Central Bank of Nigeria, CBN, through its Monetary Policy Committee, MPC, on Tuesday left the Monetary Policy Rate unchanged at 13.5 per cent.                            The rate has been retained for a fourth straight meeting

The CBN Governor, Mr Godwin Emefiele, announcing the decision of the committee at the end of a two-day meeting held at the apex bank’s headquarters in Abuja, explained that all the 11 members that attended the meeting unanimously agreed to hold the monetary policy stance.

According to the Governor apart from the MPR that was retained at 13.5 per cent, the committee decided to keep the Cash Reserves Ratio at 22.5 per cent.

Also retained are the Liquidity Ratio, which was left at 30 per cent; and the Asymmetric Window which was left at +200 and -500 basis points around the MPR.

“In view of the uptick in inflationary pressures, (the MPC) decided that the balance of risks was in favour of protecting price stability,” Emefiele said, after data last week showed inflation hit 11.6 per cent  in October.

Emefiele said a central bank decision to set a minimum loan-to-deposit ratio for lenders had helped lift economic growth to almost 2.3 per cent in the third quarter, adding that the policy must be sustained as it had led to a drop in interest rates.

Some banks have been caught out by the initiative, incurring penalties from the central bank.

The central bank has been trying to boost growth by encouraging commercial banks to lend, but it has also kept interest rates high and liquidity tight to support the currency.