The Monetary Policy Committee (MPC) of Nigeria’s apex bank, the Central Bank of Nigeria (CBN) has voted reduce the Monetary Policy Rate (MPR) to 11.5 percent from 12.5 percent.
MPR is a policy adopted by the monetary authority to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply.
This is often as an attempt to reduce inflation or the interest rate to ensure price stability and general trust of the value and stability of the nation’s currency.
The apex bank took the decision at Tuesday’s MPC meeting.
CBN MPC votes to reduce MPR from 12.5 % to 11.5%
— Central Bank of Nigeria (@cenbank) September 22, 2020
The MPC also adjusted Asymmetric Window from +200/-500 to +100 and -700 basis points around the MPR, while retaining CRR at 27.50 percent. The committee equally retained liquidity ratio at 30 percent
In his remarks at the meeting, CBN governor, Godwin Emefiele noted that strategic health of Nigerian banks remains strong and able to support the Nigerian economy.
He disclosed that total loans in the Nigerian banking sector rose from N15 Trillion in June 2019 to N19.33 Trillion in August 2020, while total assets in the banking sector also rose from N38 Trillion in June 2019 to N48 Trillion in August 2020
According to the governor, Non-Performing Loans (NPLs) in Nigeria’s banking sector dropped from 9.4 percent in June 2019 to 6.1 per cent in August 2020
Emefiele also noted that there is available funding, at low interest rates, for business owners in Nigeria, through their banks, while reiterating the need to diversify Nigeria’s economy to grow its foreign revenue base
He urged Nigerians to support the local production and consumption of food items in which the country has comparative advantage, even as he restated his commitment to complement fiscal policy with a view to restarting growth post-COVID 19.