Godwin Emefiele, CBN Governor

In response to the impact of the coronavirus pandemic and low oil price to the country’s economy, the Monetary Policy Committee of the Central Bank of Nigeria on Thursday reduced the Monetary Policy Rate (MPC)  also called the benchmark interest rate to 12.5 per cent from 13.5 per cent for the first since March 2019.

Reading the communique of the Committee after its two-day meeting in Abuja, the CBN Governor, Godwin Emefiele, explained that it retained the Cash Reserve Ratio (CRR) at 27.5 per cent and Liquidity Ratio (LR) at 30 per cent.

Seven members voted to cut the MPR by 100 basis points, while two members voted for a 150bps rate cut, with one member electing for a 200bps rate cut, the Governor said.

The MPC left the asymmetric corridor around the MPR at +200/-500bps

The Committee also considered developments in the global and domestic economy since its last meeting including, the negative impact of COVID-19 on global growth and the responses of global central banks’ to the COVID-19.

On the domestic front, the Committee noted that sustained inflationary pressure (April: +8bps to 12.34% y/y), and weaker but still positive output growth in Q1-2020, as well as a sustained decline in manufacturing PMI.