The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has on Friday, raised the Cash Reserve Ratio by 500 basis points to 27.5%.
A vote from nine out of 11 members of the committee agreed that the monetary policy rate, which impacts interest rate, should remain at 13.5%.
Godwin Emefiele, the CBN governor disclosed this while reading the communique at the end of the first MPC meeting in the year 2020 on Friday in Abuja. Meanwhile, other parameters such as Monetary Policy Rate (MPR), Liquidity ratio, and asymmetric corridor remain unchanged.
He said the decision of the MPC to raise the CRR is informed by recent inflationary pressure in the economy. Also, the CBN Governor stated that hold all rates was informed by the conviction of the committee members that there is a need to observe the response of the economy to several policies introduced by the Central Bank.
According to Emefiele, the Loan to Deposit ration raised alongside OMO restriction pushed liquidity high in the economy, while border closure has also exacerbated the inflation rate, which is inimical to growth.
Highlights of the Committee’s decision
MPR was kept at 13.50%
The asymmetric corridor of +200/-500 basis points around the MPR was retained.
CRR was held at 22.5% to 27.5%..by 500 basis points
The Liquidity Ratio was also kept at 30%