The Central Bank of Nigeria (CBN) on Tuesday cut its key interest rates from 13 percent to 11 percent, the very first of such cut since 2009.
The bank revealed this after its Monetary Policy Committee (MPC) meeting on Tuesday, maintaining its fixed stance on foreign exchange availability in the country.
Addressing journalists at the end of the meeting, Godwin Emefiele, governor of the apex bank, revealed that CBN was also cutting its cash reserve ratio (CRR) from 25 percent to 20 percent.
The CRR cut means the bank would make more cash available for commercial banks to lend, with special focus on the agriculture, solid mineral and power sector.
These sectors were earmarked by the CBN as the ones that the committee recognizes as readily driving inclusive growth in the economy.
While admitting that the CBN must simulate growth, Emefiele said commercial banks have been lending from the apex bank to invest in bonds rather than lend to Nigerian businesses in need of funds.
He suggested that the CBN would henceforth monitor funds lent from the regulator and ensure that they are passed down to businesses that are capable of stimulating economic growth.
At the September MPC meeting, the committee revealed that Nigeria may plunge into a recession in the first quarter of 2016, if proactive measures are not taken to drive inclusive growth, which the November meeting attempted to address.
This MPC meeting is the last for the year 2015.